Navigate the Stock Market: July 2022

Friday, July 29, 2022

PCE Prices ... Personal Spending ... Chicago PMI ... Univ of Michigan Sentimnt ... Best DOW Stocks ... Best ETFs … Stock Market Analysis ...

“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.

“The stock market, in its entirety, is still too high, so we have to let the averages come in before putting more money to work.” – Jim Cramer, CNBC Host (7/27/2022)

“When the Fed gets out of the way, you have a real window and you’ve got to jump through it. … When a recession comes, the Fed has the good sense to stop raising rates, I think that window has finally arrived, and you don’t want to close it on yourself.” – Jim Cramer, CNBC Host (7/28/2022)

PERSONAL SPENDING / PERSONAL INCOME (WSJ)
“U.S. households’ spending rose more rapidly last month as annual inflation hit a new four-decade high, outpacing income growth. Consumers boosted their seasonally adjusted spending by 1.1% in June... Personal income rose by 0.6% last month, the same as the prior month. After taxes and adjusting for inflation, incomes fell by 0.3%.” Story at...
https://www.wsj.com/articles/inflation-consumer-spending-personal-income-june-2022-11659059583

PCE PRICES (CNN)
“Another key measure of inflation set a fresh 40-year high in June, a month marked by record-high gas prices. The Personal Consumption Expenditures price index, which measures the change in the prices of goods and services purchased by consumers, rose by 6.8% in June as compared to the same period last year...core PCE – the inflation index closely watched by the Federal Reserve – increased by 4.8% from one year ago, up slightly from May but down from a high of 5.3% in February.” Story at...
https://www.cnn.com/2022/07/29/economy/pce-inflation-june-fed/index.html

EMPLOYMENT COST INDEX (ShareCast)
“A broad measure of workers' compensation increased modestly more quickly than anticipated over the three months to June. According to the US Department of Labor, the Employment Cost Index advanced at a quarter-on-quarter clip of 1.3% during the second quarter.” Story at
https://www.sharecast.com/news/international-economic/us-q2-employment-cost-index-rises-a-bit-more-quickly-than-anticipated--10260141.html

CHICAGO PMI (MarketWatch)
“The Chicago Business Barometer, also known as the Chicago PMI, fell to 52.1in July from 56 in the prior month. It is the lowest reading since August 2020. Economists polled by the Econoday forecast a steady 56 reading.” Story at...
https://www.marketwatch.com/story/chicago-pmi-continues-to-soften-in-july-falls-to-lowest-level-in-almost-two-years-11659102951

UNIV OF MICHIGAN SENTIMENT-FINAL (Univ of Michigan)
“Consumer sentiment was essentially unchanged from June, when it had reached an all-time low for the survey, according to the University of Michigan Surveys of Consumers. Most components of the index were little changed, though buying conditions for durables adjusted upwards, primarily due to perceptions of easing supply constraints. Still, buying conditions for durables remained 28% lower than July 2021, according to U-M economist Joanne Hsu, director of the surveys.” Story at...
https://news.umich.edu/consumers-adjust-to-inflation-as-labor-market-expectations-worsen/

MARKET REPORT / ANALYSIS
-Friday the S&P 500 rose about 1.4% to 4130.
-VIX dipped about 4% to 21.33.
-The yield on the 10-year Treasury slipped to 2.651%.

PULLBACK DATA:
-Drop from Top: 13.9% as of today. 23.6% max.
-Trading Days since Top: 143-days.
The S&P 500 is 5% Below its 200-dMA & closed 5.3% Above its 50-dMA. It also closed above its 100-dMA Friday.

*I won’t call the correction over until the S&P 500 makes a new-high; however, we hope to be able to call the bottom when we see it.

MY TRADING POSITIONS:
SH, short the S&P 500 ETF. I added a position in SSO today, cancelling my short (without selling it) and adding to the stock side of the portfolio with a short-term holding.

TODAY’S COMMENT:
On Fridays, I summarize a number of indicators to get a weekly feel for trend. Not much change from last week – indicators remain to the Bull side (6-bear and 18-bull). These indicators tend to be both long-term and short-term, so they are different than the 20 that I report on daily. Details follow:

BULL SIGNS
-The 10-dMA % of issues advancing on the NYSE (Breadth) is above 50%.
-The 50-dMA percentage of issues advancing on the NYSE (Breadth) is above 50.
-The 100-dMA percentage of issues advancing on the NYSE (Breadth) is above 50%
-Sentiment.
-MACD of the percentage of issues advancing on the NYSE (breadth) made a bullish crossover 24 June.
-MACD of S&P 500 price made a bullish crossover 24 June.
-Short-term new-high/new-low data.
-My Money Trend indicator.
-VIX.
-The size of up-moves has been larger than the size of down-moves over the last month.
-The longer-term, 50-dEMA, Fosback Hi-Low Logic Index is Bullish.
-McClellan Oscillator is positive.
-The graph of the 100-day Count (the 100-day sum of up-days) is headed up.
-The 5-10-20 Timer System is BUY; the 5-dEMA and 10-dEMA are both ABOVE the 20-dEMA.
-The smoothed advancing volume on the NYSE is rising.
-Cyclical Industrials (XLI-ETF) are out-performing the S&P 500. ?????
-67% of the 15-ETFs that I track have been up over the last 10-days – this is starting to look overdone.
- S&P 500 is outperforming the Utilities (XLU), but not by much.

NEUTRAL
-The short-term, 5-day & 10-day, Fosback Hi-Low Logic Indexes.
-The 50-dMA percentage of issues advancing on the NYSE (Breadth) popped above 50% ending its streak of consecutive days. (3 days in a row is my “correction-now” signal)
-There was a Follow-thru Day 27 July that canceled all Distribution Days in the last 5 weeks.
-There have been 3 Statistically-Significant day (big moves in price-volume) in the last 15-days.
-Issues advancing on the NYSE (Breadth) compared to the S&P 500.
-The S&P 500 is 5% below its 200-dMA. (Bull indicator is 12% below the 200-day, although this is based on “normal” pullbacks.)
-RSI
-There was an Inverse Zweig Breadth Collapse (negative Breadth Thrust) 21 June. That’s a rare, very-bearish sign, but it was 4-weeks ago.
-The 52-week, New-high/new-low ratio improved by 0.7 standard deviations on 15 July – too small to send a signal.
-There was a Hindenburg Omen signal 8 April – it was canceled when the McClellan Oscillator turned bullish.
-The Calm-before-the-Storm/Panic Indicator.
-1 July was a Bullish Outside Reversal Day – expired.
-2.8% of all issues traded on the NYSE made new, 52-week highs when the S&P 500 made a new all-time-high, 3 January. (There is no bullish signal for this indicator.) This indicated that the advance was too narrow and a correction was likely to be >10%. – It proved correct, but is now Expired
-There have been 12 up-days over the last 20 sessions –neutral.
-There have been 7 up-days over the last 10 sessions – neutral.
-There were three 90% Down-volume days 9-16June. There was a high up-volume day 19 July, but it was too long after the down-days to signal a reversal.

BEAR SIGNS
-Long-term new-high/new-low data.
-Buying Pressure minus Selling Pressure ticked down again today.
-Bollinger Bands are bearish.
-Slope of the 40-dMA of New-highs is down. This is one of my favorite trend indicators.
-The Smart Money (late-day action) is turning down.
-Overbought/Oversold Index (Advance/Decline Ratio).

On Friday, 21 February, 2 days after the top before the Coronavirus pullback, there were 10 bear-signs and 1 bull-sign. Now there are 6 bear-signs and 18-Bull. Last week, there were 5 bear-signs and 17 bull-signs.

Earnings reports were poor this week, but not as bad as had been feared, so markets responded positively. We note that breadth (as indicated in the chart below) is breaking trend. This is the first time the 100-dMA of % of stocks advancing has been above 50% since very early in the correction.

Not only did the %-of Advancing issues pop above its 100-dMA, the S&P 500 climbed above its 100-dMA. This has been a very bullish move off the bottom. The S&P 500 broke above the short-term trend line (black in the chart). Now, I think it may be able to make it to the longer-term trend-line shown in green. That is very close to the 200-dMA. At present, the S&P 500 is near the June highs and we would expect to see the rally slow down at this resistance point, especially since we’ve seen 3 up-days in a row.

Today, the daily sum of 20 Indicators remained +10 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations improved from +82 to +97. (The trend direction is more important than the actual number for the 10-day value.) These numbers sometimes change after I post the blog based on data that comes in late. Most of these 20 indicators are short-term so they tend to bounce around a lot.

The rally broke above the 100-dMA Friday (4122) and it is not impossible for the Index to reach the 200-dMA. This still looks like a rally in a bear market. I think 4300 is a good target for the top of the rally, somewhat below the 200-dMA.

LONG-TERM INDICATOR: The Long Term NTSM indicator remained BUY: PRICE, SENTIMENT, VIX & VOLUME are bullish. I still expect the S&P 500 to test its prior low of 3667, but it may be possible to trade this market now, but remember for the longer-term, one indicator trumps them all – “Don’t fight the FED.” I am not convinced that the FED will pivot soon.

I’m a Bear longer-term; short-term the bulls remain in charge. FOMO (fear of missing out) is still not done. I added a long position in SSO to counter my small short position.

BEST ETFs - MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs (Ranked Daily)

*For additional background on the ETF ranking system see NTSM Page at…
http://navigatethestockmarket.blogspot.com/p/exchange-traded-funds-etf-ranking.html

BEST DOW STOCKS - TODAY’S MOMENTUM RANKING OF THE DOW 30 STOCKS (Ranked Daily)
Here’s the revised DOW 30 and its momentum analysis. The top ranked stock receives 100%. The rest are then ranked based on their momentum relative to the leading stock.

For more details, see NTSM Page at…
https://navigatethestockmarket.blogspot.com/p/a-system-for-trading-dow-30-stocks-my_8.html

FRIDAY MARKET INTERNALS (NYSE DATA)

My basket of Market Internals remained BUY.

(Market Internals are a decent trend-following analysis of current market action, but should not be used alone for short term trading. They are most useful when they diverge from the Index.)

My stock-allocation in the portfolio is now roughly 40% invested in stocks.

I trade about 15-20% of the total portfolio using the momentum-based analysis I provide here. If I can see a definitive bottom, I’ll add a lot more stocks to the portfolio using an S&P 500 ETF.

Thursday, July 28, 2022

Best DOW Stocks ... Best ETFs … Stock Market Analysis ... GDP ... Jobless Claims ... Fed Pivot Coming? ... The Rally is a Bull Trap

“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.

“The stock market, in its entirety, is still too high, so we have to let the averages come in before putting more money to work.” – Jim Cramer, CNBC Host (7/27/2022)

GDP (CNBC)
“The U.S. economy contracted for the second straight quarter from April to June, hitting a widely accepted rule of thumb for a recession, the Bureau of Economic Analysis reported Thursday. Gross domestic product fell 0.9% at an annualized pace for the period, according to the advance estimate.” Story at...
https://www.cnbc.com/2022/07/28/gdp-q2-.html
NBER (National Bureau of Economic Research) is the agency that determines when recessions start. They tend to do it after-the-fact. Has recession started? We don’t know.

JOBLESS CLAIMS (WSJ)
“New applications for unemployment benefits held near the highest level of the year last week, a sign that the tight labor market is loosening. Initial jobless claims, a proxy for layoffs, fell 5,000 to a seasonally adjusted 256,000 in the week ended July 23 from the prior week’s upwardly revised level...The prior week’s reading was revised up by 10,000 and was the highest level of claims since November.” Story at...
https://www.wsj.com/articles/jobless-claims-hold-near-highest-level-of-the-year-11659013014

FED PIVOT ON THE WAY (Heritage Capital)
“...let me say that whether or not inflation is tamed, (I argue it is) Powell and the Fed will blink. I believe the unemployment rate is bottoming right here and right now. The economy created 372,000 new jobs in June and I do not think that number will be surpassed for the next 12-18 months. In all likelihood, a negative monthly print will be seen in Q4 2022 or Q1 2023. Now tell me; will Jay Powell continue to raise rate when the economy is losing jobs?” Commentary at...
https://investfortomorrow.com/blog/special-fed-update-pivot-on-the-way-no-recession-yet/
A Fed pivot (lowering rates or suspending rate hikes) would be very bullish.

MARKET JUMP IS A TRAP (CNBC)
“Morgan Stanley’s Mike Wilson believes stocks are on a collision course with more pain due to the economic slowdown. The firm’s chief U.S. equity strategist and chief investment officer said on CNBC’s “Fast Money” that investors should resist putting their money to work in stocks despite the market’s post-Fed-decision jump... Wilson is bracing for the S&P to fall below 3,636, the 52-week low hit last month...“We’re trying to give them [clients] a good risk-reward. Right now, the risk-reward, I would say, is about 10 to one negative,”” Story at...
https://www.cnbc.com/2022/07/27/market-jump-after-fed-hike-is-trap-morgan-stanley-warns-investors-.html

MARKET REPORT / ANALYSIS
-Thursday the S&P 500 rose about 1.2% to 4072.
-VIX dipped about 4% to 22.33.
-The yield on the 10-year Treasury slipped to 2.676%. (Worried investors are buying Treasuries, driving down interest rates.)

PULLBACK DATA:
-Drop from Top: 15.1% as of today. 23.6% max.
-Trading Days since Top: 142-days.
The S&P 500 is 6.3% Below its 200-dMA & closed 3.9% Above its 50-dMA. The 100-dMA is 4123.
*I won’t call the correction over until the S&P 500 makes a new-high; however, we hope to be able to call the bottom when we see it.

MY TRADING POSITIONS:
SH, short the S&P 500 ETF. I didn’t add any long positions – I hate chasing rallies.

TODAY’S COMMENT:
...is not much different than yesterday...
I saw comments at Wednesday was a Blow-off Top. Nope. Volume was too low and of course today’s action moved the S&P 500 higher. So, we can ask again, “Was today was a Blow-off Top?” No. The only top indicator currently warning is Bollinger Bands. Bollinger Bands are overbought, but one top-indicator doesn’t drive the train. We also see that the overbought/oversold ratio is overbought, but that indicator is a very short-term indicator. Further, there were signs of increasing volume today. It was 15% above the monthly average while it had been 15% below trend just a week and a half ago.

I wouldn’t be a surprised to see a down-day tomorrow based on the overbought/oversold ratio and the high up-days we’ve seen recently.

Today, the daily sum of 20 Indicators remained +10 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations improved from +82 to +97. (The trend direction is more important than the actual number for the 10-day value.) These numbers sometimes change after I post the blog based on data that comes in late. Most of these 20 indicators are short-term so they tend to bounce around a lot.

Overall, it still looks like it is possible that the rally will get to the 100-dMA (4123) and it is not impossible for the Index to reach the 200-dMA. This still looks like a rally in a bear market. I think 4300 is a good target for the rally, somewhat below the 200-dMA.

LONG-TERM INDICATOR: The Long Term NTSM indicator remained BUY: PRICE VIX & VOLUME are bullish; SENTIMENT is neutral. I still expect the S&P 500 to test its prior low of 3667, but it may be possible to trade this market now, but remember for the longer-term, one indicator trumps them all – “Don’t fight the FED.”

I’m a Bear longer-term; short-term the bulls remain in charge. FOMO (fear of missing out) is still not done. I still may add a long position to counter my small short position.

BEST ETFs - MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs (Ranked Daily)

For more details, see NTSM Page at…
https://navigatethestockmarket.blogspot.com/p/a-system-for-trading-dow-30-stocks-my_8.html

THURSDAY MARKET INTERNALS (NYSE DATA)

My stock-allocation in the portfolio is roughly 30% invested in stocks.

I trade about 15-20% of the total portfolio using the momentum-based analysis I provide here. If I can see a definitive bottom, I’ll add a lot more stocks to the portfolio using an S&P 500 ETF.

Wednesday, July 27, 2022

Best DOW Stocks ... Best ETFs … Stock Market Analysis ... FOMC Rate Decision ... Durable Orders ... Crude Inventories

“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.

FOMC RATE DECISION (Reuters)
“The Federal Reserve said on Wednesday it would not flinch in its battle against the most intense breakout of inflation in the United States since the 1980s even if that means a "sustained period" of economic weakness and a slowing jobs market...the 75-basis-point rate increase announced by the Fed on Wednesday...has now jacked the central bank's overnight interest rate from near zero to a level between 2.25% and 2.50%. That is the fastest tightening of monetary policy since former Fed Chair Paul Volcker battled double-digit inflation in the 1980s.” Story at...
https://www.reuters.com/markets/us/fed-unveil-another-big-rate-hike-signs-economic-slowdown-grow-2022-07-27/
MY cmt: “...the 1981-82 recession [caused by FED tightening] was the worst economic downturn in the United States since the Great Depression.” From...
https://www.federalreservehistory.org/essays/recession-of-1981-82#:~:text=July%201981%E2%80%93November%201982,effort%20to%20fight%20mounting%20inflation.&text=Prior%20to%20the%202007%2D09,States%20since%20the%20Great%20Depression.

DURABLE ORDERS (Bloomberg)
“Orders placed with US factories for durable goods rose unexpectedly in June, fueled by a surge in defense aircraft as well as sustained demand for equipment. Bookings for durable goods -- items meant to last at least three years -- increased 1.9% in June after a 0.8% advance a month earlier...” Story at...
https://www.bloomberg.com/news/articles/2022-07-27/us-durable-goods-orders-rise-unexpectedly-on-defense-bookings

EIA CRUDE OIL INVENTORIES (EIA)
“U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 4.5 million barrels from the previous week. At 422.1 million barrels, U.S. crude oil inventories are about 6% below the five year average for this time of year.” Report at...
https://ir.eia.gov/wpsr/wpsrsummary.pdf
The report indicates demand is strong.

MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 rose about 2.6% to 4023.
-VIX dipped about 6% to 23.28.
-The yield on the 10-year Treasury slipped to 2.790%.

PULLBACK DATA:
-Drop from Top: 16.1% as of today. 23.6% max.
-Trading Days since Top: 141-days.
The S&P 500 is 7.5% Below its 200-dMA & closed 2.7% Above its 50-dMA.
*I won’t call the correction over until the S&P 500 makes a new-high; however, we hope to be able to call the bottom when we see it.

MY TRADING POSITIONS:
SH, short the S&P 500 ETF.

TODAY’S COMMENT:
The FED decision went as expected and the markets loved the press conference. No surprises.

Today was a statistically significant up-day. That just means that the price-volume move exceeded my statistical parameters. Statistics show that a statistically-significant, up-day is followed by a down-day about 60% of the time. Statistically-significant, up-days almost always coincide with tops, but not all statistically-significant, up-days occur at tops. Today could be a top, but there are no top indicators warning and that is not what the bears want to see.

Today was also a bullish Follow-Through day. “A follow-through day occurs during a market correction when a major index closes significantly higher than the previous day, and in greater volume. It happens Day 4 or later of an attempted rally.” From https://education.investors.com/financial-dictionary/ibd-terms/follow--through-day-concept#:~:text=A%20follow%2Dthrough%20day%20occurs,later%20of%20an%20attempted%20rally.

Buying Pressure minus selling Pressure is fading. Money Trend is rising slowly. The Smart Money is very bullish. New-High New-Low data is bullish, but the 40-dMA of New Highs is still falling and that is worrisome.

Today, the daily sum of 20 Indicators remained +10 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations improved from +67 to +82. (The trend direction is more important than the actual number for the 10-day value.) These numbers sometimes change after I post the blog based on data that comes in late. Most of these 20 indicators are short-term so they tend to bounce around a lot.

Overall, it still looks like it is possible that the rally will get to the 100-dMA and it is not impossible for the Index to reach the 200-dMA. This still looks like a rally in a bear market. I think 4300 is a good target for the rally.

LONG-TERM INDICATOR: The Long Term NTSM indicator remained BUY: PRICE & VOLUME are bullish; SENTIMENT & VIX is neutral. I still expect the S&P 500 to test its prior low of 3667, but it may be possible to trade this market now, but remember for the longer-term, one indicator trumps them all – “Don’t fight the FED.”

I’m a Bear longer-term; short-term the bulls remain in charge. FOMO (fear of missing out) is still not done. I may add a long position to counter my small short position.

BEST ETFs - MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs (Ranked Daily)
My chart of this data is looking funky again. The top four ETF ranking follows:
(1) IBB (2) XLV (3) XLU (4) XLE
*For additional background on the ETF ranking system see NTSM Page at…
http://navigatethestockmarket.blogspot.com/p/exchange-traded-funds-etf-ranking.html

BEST DOW STOCKS - TODAY’S MOMENTUM RANKING OF THE DOW 30 STOCKS (Ranked Daily)
Here’s the revised DOW 30 and its momentum analysis. The top ranked stock receives 100%. The rest are then ranked based on their momentum relative to the leading stock.

For more details, see NTSM Page at…
https://navigatethestockmarket.blogspot.com/p/a-system-for-trading-dow-30-stocks-my_8.html

WEDNESDAY MARKET INTERNALS (NYSE DATA)

Best DOW Stocks ... Best ETFs … Stock Market Analysis ... Consumer Confidence ... New Home Sales

“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.

CONSUMER CONFIDENCE (Conference Board)
“The Conference Board Consumer Confidence Index® decreased in July, following a larger decline in June. The Index now stands at 95.7 (1985=100), down 2.7 points from 98.4 in June... “Consumer confidence fell for a third consecutive month in July,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board. “The decrease was driven primarily by a decline in the Present Situation Index—a sign growth has slowed at the start of Q3. The Expectations Index held relatively steady, but remained well below a reading of 80, suggesting recession risks persist.” Report at...
https://www.conference-board.org/topics/consumer-confidence/press/CCI-July-2022

NEW HOME SALES (Forbes)
“New home sales unexpectedly plunged much more than economists projected in June, according to data released Tuesday, adding to signs that the housing market is abruptly unraveling pandemic-era gains as experts start to worry the downturn could spill over into the broader economy—potentially even triggering a recession... In a note to clients last week, Bank of America economist Michael Gapen downgraded his economic forecast as a result of the steeper-than-expected housing market decline, saying gross domestic product likely shrank 1.5% last quarter.” Story at...
https://www.forbes.com/sites/jonathanponciano/2022/07/26/housing-market-collapse-deepening-fast-new-home-sales-crater-again-as-experts-worry-downturn-could-spark-recession/?sh=5419fca015de

MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 fell about 1.2% to 3921.
-VIX rose about 6% to 24.69. (VIX bucked trend today)
-The yield on the 10-year Treasury rose to 2.810%.

PULLBACK DATA:
-Drop from Top: 18.3% as of today. 23.6% max.
-Trading Days since Top: 140-days.
The S&P 500 is 9.9% BELOW its 200-dMA & closed ON its 50-dMA.
*I won’t call the correction over until the S&P 500 makes a new-high; however, we hope to be able to call the bottom when we see it.

MY TRADING POSITIONS:
SH, short the S&P 500 ETF.

TODAY’S COMMENT:
Microsoft (MSFT) missed on revenue and earnings, but issued an optimistic forecast – it was up in after-hours trading and finished above its closing price. Alphabet (GOOG) missed on revenue and earnings and issued an uncertain future based on the economic environment. It too was up in after-hours trading and finished higher than its price at the close. As Paul Schatz noted yesterday, rising stocks on bad news is very bullish. Futures were up as I write this. Let’s see how the market trades tomorrow as the FED makes its interest rate decision at 2PM. 75 basis point is the expectation, but will Powell tip the Fed’s hand for future hikes?

This still looks like a rally in a bear market to me.

Today, the daily sum of 20 Indicators advanced from +7 to +10 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations improved from +54 to +67. (The trend direction is more important than the actual number for the 10-day value.) These numbers sometimes change after I post the blog based on data that comes in late. Most of these 20 indicators are short-term so they tend to bounce around a lot.

LONG-TERM INDICATOR: The Long Term NTSM indicator remained BUY: PRICE, SENTIMENT & VOLUME are bullish; VIX is neutral. I still expect the S&P 500 to test its prior low of 3667, but it may be possible to trade this market now, but remember, one indicator trumps them all – “Don’t fight the FED.”

I’m a Bear although it is possible that the rally will get to the 100-dMA and it is not impossible for the Index to reach the 200-dMA.

BEST ETFs - MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs (Ranked Daily)
My chart of this data is looking funky again. The top four ETF ranking follows:
(1) IBB (2) XLV (3) XLU (4) XLE
*For additional background on the ETF ranking system see NTSM Page at…
http://navigatethestockmarket.blogspot.com/p/exchange-traded-funds-etf-ranking.html

BEST DOW STOCKS - TODAY’S MOMENTUM RANKING OF THE DOW 30 STOCKS (Ranked Daily)
Here’s the revised DOW 30 and its momentum analysis. The top ranked stock receives 100%. The rest are then ranked based on their momentum relative to the leading stock.

For more details, see NTSM Page at…
https://navigatethestockmarket.blogspot.com/p/a-system-for-trading-dow-30-stocks-my_8.html

TUESDAY MARKET INTERNALS (NYSE DATA)

My basket of Market Internals improved to BUY.

(Market Internals are a decent trend-following analysis of current market action, but should not be used alone for short term trading. They are most useful when they diverge from the Index.)

Monday, July 25, 2022

Walmart Reports Less Retail Spending ... Best DOW Stocks ... Best ETFs … Stock Market Analysis

“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.

WALMART REPORTED TODAY AND THE NEWS WASN’T GOOD (CNBC)
“Walmart shares fell after the company cut its profit expectations as inflation forces shoppers to spend more on food and less on electronics and other discretionary categories.” Story at...

https://www.cnbc.com/2022/07/25/walmart-cuts-second-quarter-guidance-as-it-sees-slower-growth-due-to-inflation.html

DIZZYING WEEK AHEAD (Heritage Capital)
“With the biggest earnings week of the season including Amazon, Apple, Facebook, Microsoft and UPS, the FOMC announcement on Wednesday and first look at Q2 GDP on Thursday, this is going to be a super busy week. Heading into the weekend, S&P 4000 or so looked to be a logical pause point for the stock market as I wrote here. Stocks have had a nice bounce off the June bottom and a breather will not be the worst thing in the world... The key is to see if companies warn about Q3 or Q4 earnings or offer reduced forecasts. But the absolute most important thing isn’t what the news is, but how stocks react. Do you know what’s more bullish than a stock going up on bad news? Nothing. And the same holds true on the bearish side.” – Paul Schatz, President Heritage Capital. Full commentary at...
https://investfortomorrow.com/blog/dizzying-week-ahead/

MARKET REPORT / ANALYSIS
-Monday the S&P 500 rose about 0.1% to 3967.
-VIX rose about 1% to 23.36. (VIX bucked trend today)
-The yield on the 10-year Treasury rose to 2.804%.

PULLBACK DATA:
-Drop from Top: 17.3% as of today. 23.6% max.
-Trading Days since Top: 19-days.
The S&P 500 is 8.9% BELOW its 200-dMA & 1.2% ABOVE its 50-dMA.
*I won’t call the correction over until the S&P 500 makes a new-high; however, we hope to be able to call the bottom when we see it.

MY TRADING POSITIONS:
SH, short the S&P 500 ETF.

TODAY’S COMMENT:
Back and forth was the call for the day as the S&P 500 gyrated between gains and losses. It fell nearly 1% from the high of the day only to recover all losses in the last hour and finish slightly up for the day.

Market internals were mostly positive except that new-lows outpaced new-highs 60 to 25. As Paul Schatz noted above, it’s all about the news this week.

Based on Walmart’s report, as I suggested last week, we may find that the news is worse than anticipated. Walmart is down 10% in after-hours trading as I write this based on the report above..

Today, the daily sum of 20 Indicators declined from +9 to +7 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations improved from +44 to +54. (The trend direction is more important than the actual number for the 10-day value.) These numbers sometimes change after I post the blog based on data that comes in late. Most of these 20 indicators are short-term so they tend to bounce around a lot.

LONG-TERM INDICATOR: The Long Term NTSM indicator remained BUY: PRICE, SENTIMENT, VOLUME & VIX are bullish. I still expect the S&P 500 to test its prior low of 3667, but it may be possible to trade this market now, but remember, one indicator trumps them all – “Don’t fight the FED.”

I’m a Bear although it is possible that the rally will get to the 100-dMA and it is not impossible for the Index to reach the 200-dMA.

BEST ETFs - MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs (Ranked Daily)
My chart of this data is looking funky again. The top four ETF ranking follows:
(1) IBB (2) XLV (3) XLU (4) XLE
*For additional background on the ETF ranking system see NTSM Page at…
http://navigatethestockmarket.blogspot.com/p/exchange-traded-funds-etf-ranking.html

BEST DOW STOCKS - TODAY’S MOMENTUM RANKING OF THE DOW 30 STOCKS (Ranked Daily)
Here’s the revised DOW 30 and its momentum analysis. The top ranked stock receives 100%. The rest are then ranked based on their momentum relative to the leading stock.

For more details, see NTSM Page at…
https://navigatethestockmarket.blogspot.com/p/a-system-for-trading-dow-30-stocks-my_8.html

MONDAY MARKET INTERNALS (NYSE DATA)

My basket of Market Internals remained HOLD.

(Market Internals are a decent trend-following analysis of current market action, but should not be used alone for short term trading. They are most useful when they diverge from the Index.)

Saturday, July 23, 2022

Best DOW Stocks ... Best ETFs … Stock Market Analysis ... IHS Markit Composite PMI

“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.

IHS MARKET COMPOSITE PMI (S&P Global)
“US private sector firms indicated the first contraction in business activity since June 2020 in July, according to latest ‘flash’ PMI™ data from S&P Global. The downturn in output signalled a further loss of momentum across the economy of a degree not seen outside of COVID-19 lockdowns since 2009. The downturn was led by a steep drop in service sector activity, though production at manufacturers also fell marginally, down for the first time in over two years.” Report at...
https://www.pmi.spglobal.com/Public/Home/PressRelease/52db97a5557c433d855b74a46c5ecff6

A SURGE IN BUYING (Heritage Capital, 22 July)
“We are finally seeing a surge in buying interest as the many of the major indices attempt to exceed their late June highs. If successful that would be higher highs and higher lows. If I am wrong and the bear market is about to resume we should see immediate failure by the bulls... After such a large up day it would be healthy to see stocks pause and digest a little. The S&P 500 should see more upside to at least 4000, another 2% from here. The NASDAQ 100 has already achieved that level on a comparable basis.” – Paul Schatz, President Heritage Capital.
https://investfortomorrow.com/blog/finally-a-surge-in-buying-interest/

EARNINGS UPDATE (FACTSET)
“The second-quarter earnings season for the S&P 500 continues to be weaker than normal. Both the number of S&P 500 companies reporting positive earnings surprises and the magnitude of these positive surprises are below their five-year averages. However, the index has a higher earnings growth rate for the second quarter today relative to the end of the quarter mainly due to continued upward revisions to EPS estimates for companies in the Energy sector... Overall, 21% of the companies in the S&P 500 have reported actual results for Q2 2022 to date. Of these companies, 68% have reported actual EPS above estimates, which is below the five-year average of 77%. In aggregate, companies are reporting earnings that are 3.6% above estimates, which is also below the five-year average of 8.8%.” Analysis at...
https://insight.factset.com/sp-500-earnings-season-update-july-22-2022

MARKET REPORT / ANALYSIS
-Friday the S&P 500 dropped about 0.9% to 3962.
-VIX dropped about 0.3% to 23.03. (VIX bucked trend today)
-The yield on the 10-year Treasury dipped to 2.759%.

PULLBACK DATA:
-Drop from Top: 17.4% as of today. 23.6% max.
-Trading Days since Top: 138-days.
The S&P 500 is 9% BELOW its 200-dMA & 1.1% ABOVE its 50-dMA.
*I won’t call the correction over until the S&P 500 makes a new-high; however, we hope to be able to call the bottom when we see it.

MY TRADING POSITIONS:
SH, short the S&P 500 ETF.

TODAY’S COMMENT:
On Fridays, I summarize a number of indicators to get a weekly feel for trend. Last week, the end-of-week summary was in a neutral position; now indicators have reversed to the Bull side (5-bear and 17-bull). These indicators tend to be both long-term and short-term, so they are different than the 20 that I report on daily. Details follow:

BULL SIGNS
-The 10-dMA % of issues advancing on the NYSE (Breadth) is above 50%.
-The 50-dMA percentage of issues advancing on the NYSE (Breadth) is below 50.
-Sentiment.
-MACD of the percentage of issues advancing on the NYSE (breadth) made a bullish crossover 24 June.
-MACD of S&P 500 price made a bullish crossover 24 June.
-Short-term new-high/new-low data.
-Long-term new-high/new-low data.
-My Money Trend indicator.
-VIX.
-The size of up-moves has been larger than the size of down-moves over the last month.
-The short-term, 5-day & 10-day, Fosback Hi-Low Logic Indexes are Bullish.
-The longer-term, 50-dEMA, Fosback Hi-Low Logic Index is Bullish.
-McClellan Oscillator is positive.
-The graph of the 100-day Count (the 100-day sum of up-days) is headed up.
-The 5-10-20 Timer System is BUY; the 5-dEMA and 10-dEMA are both ABOVE the 20-dEMA.
-The Smart Money (late-day action) is bullish.
- S&P 500 are outperforming the Utilities (XLU).

NEUTRAL
-The 50-dMA percentage of issues advancing on the NYSE (Breadth) popped above 50% ending its streak of consecutive days. (3 days in a row is my “correction-now” signal)
-There have been 4 Distribution Days in the last 5 weeks, but the bear sign is 6. On the whole though, there have been a host of Distribution Days and only 1 Follow-thru day in the last 2 months.
-There have been 2 Statistically-Significant day (big moves in price-volume) in the last 15-days.
-Issues advancing on the NYSE (Breadth) compared to the S&P 500.
-Buying Pressure minus Selling Pressure has been rising, but ticked down today – call it neutral for now.
-The S&P 500 is 9% below its 200-dMA. (Bull indicator is 12% below the 200-day, although this is based on “normal” pullbacks.)
-RSI
-Overbought/Oversold Index (Advance/Decline Ratio).
-There was an Inverse Zweig Breadth Collapse (negative Breadth Thrust) 21 June. That’s a rare, very-bearish sign, but it was 4-weeks ago.
-The 52-week, New-high/new-low ratio improved by 0.7 standard deviations on 15 July – too small to send a signal.
-There was a Hindenburg Omen signal 8 April – it was canceled when the McClellan Oscillator turned bullish.
-The Calm-before-the-Storm/Panic Indicator.
-1 July was a Bullish Outside Reversal Day – expired.
-2.8% of all issues traded on the NYSE made new, 52-week highs when the S&P 500 made a new all-time-high, 3 January. (There is no bullish signal for this indicator.) This indicated that the advance was too narrow and a correction was likely to be >10%. – It proved correct, but is now Expired
-There have been 9 up-days over the last 20 sessions –neutral.
-There have been 4 up-days over the last 10 sessions – neutral.
-Cyclical Industrials (XLI-ETF) are under-performing the S&P 500, but not by much.
-There were three 90% Down-volume days 9-16June. There was a high up-volume day 19 July, but it was too long after the down-days to signal a reversal.

BEAR SIGNS
-The smoothed advancing volume on the NYSE is falling.
-Bollinger Bands were bearish Thursday.
-The 100-dMA percentage of issues advancing on the NYSE (Breadth) is below 50%
-Slope of the 40-dMA of New-highs is down. This is one of my favorite trend indicators.
-Only 43% of the 15-ETFs that I track have been up over the last 10-days.

On Friday, 21 February, 2 days after the top before the Coronavirus pullback, there were 10 bear-signs and 1 bull-sign. Now there are 5 bear-signs and 17-Bull. Last week, there were 11 bear-signs and 11 bull-signs.

This is a nice bull turn-around. Most indicators are trend following. Whether the trend will continue depends more on earnings reports next week than the indicators. Indicators can’t predict the future anyway – they help identify trends and usually, trends remain in place for a while.

Keys for the future depend on: (1) the FED Mtg 26-27 July. Will Powell surprise the markets? I don’t think the Fed mtg will be bullish for the markets. (2) Earnings reports. My guess is that they will not be good. Both Microsoft and Apple have indicated they are reducing hiring to prepare for a recession. I don’t think their forward earnings statements will be bullish.

Today, the daily sum of 20 Indicators declined from +13 to +9 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations improved from +42 to +44. (The trend direction is more important than the actual number for the 10-day value.) These numbers sometimes change after I post the blog based on data that comes in late. Most of these 20 indicators are short-term so they tend to bounce around a lot.

LONG-TERM INDICATOR: The Long Term NTSM indicator remained BUY: PRICE, SENTIMENT, & VIX are bullish; VOLUME is neutral. I still expect the S&P 500 to test its prior low of 3667, but it may be possible to trade this market now, but remember, one indicator trumps them all – “Don’t fight the FED.”

I’m a Bear although it is possible that the rally will get to the 100-dMA and it is not impossible for the Index to reach the 200-dMA.

BEST ETFs - MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs (Ranked Daily)

For more details, see NTSM Page at…
https://navigatethestockmarket.blogspot.com/p/a-system-for-trading-dow-30-stocks-my_8.html

FRIDAY MARKET INTERNALS (NYSE DATA)

My basket of Market Internals declined to HOLD.

(Market Internals are a decent trend-following analysis of current market action, but should not be used alone for short term trading. They are most useful when they diverge from the Index.)