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“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
UNIV OF MICHIGAN SENTIMENT (fxstreet)
“Consumer sentiment rose a scant 1.1 points from last month's all-time low, but the REAL takeaway is that inflation expectations cooled. That is welcome news for Fed policymakers and it makes the pressure to "go big" at the next meeting less intense after this week's scorching CPI report.” Story at...
https://www.fxstreet.com/analysis/michigan-sentiment-completes-data-trifecta-inflation-expectations-down-202207151604
 
EMPIRE STATE MANUFACTURING (NY Fed)
“Business activity increased modestly in New York State, according to firms responding to the July 2022 Empire State Manufacturing Survey. The headline general business conditions index climbed twelve points to 11.1. New orders increased marginally, and shipments expanded significantly. Unfilled orders edged lower for a second consecutive month. Delivery times lengthened at the slowest pace in months, and inventories picked up. Labor market indicators pointed to a solid increase in employment and a slightly longer average workweek. While still elevated, both the prices paid and prices received indexes moved significantly lower, pointing to a deceleration in price increases. Firms turned pessimistic about the six-month outlook, a rare occurrence in the survey’s history.” Report at...
https://www.newyorkfed.org/survey/empire/empiresurvey_overview
 
RETAIL SALES (WSJ)
“Shoppers boosted retail spending in June by 1% even though they faced higher inflation and an uncertain economic outlook. June’s increase came after sales declined slightly in May, the Commerce Department said Friday.” Story at...
https://www.wsj.com/articles/retail-sales-june-rose-consumers-inflation-11657833254
 
INDUSTRIAL PRODUCTION (fxstreet)
“Industrial Production in the US contracted by 0.2% on a monthly basis in June, the US Federal Reserve reported on Friday. This reading came in weaker than the market expectation for an expansion of 0.1%. ‘Manufacturing output declined 0.5% for a second consecutive month in June; even so, it rose at an annual rate of 4.2% in the second quarter’"...story at...
https://www.fxstreet.com/news/us-industrial-production-declines-by-02-in-june-vs-01-expected-202207151326
 
MARKET REPORT / ANALYSIS
-Friday the S&P 500 jumped up about 1.9% to 3864.
-VIX fell about 8% to 24.23.
-The yield on the 10-year Treasury declined to 2.919%.
 
PULLBACK DATA:
-Drop from Top: 19.5% as of today. 23.6% max.
-Trading Days since Top: 133-days.
The S&P 500 is 11.5% BELOW its 200-dMA & 1.9% BELOW 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:
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. The last stat-sig day was 23 June and the S&P 500 went nowhere (flat to down) afterwards. That may well be the case again.
 
On Fridays, I summarize a number of indicators to get a weekly feel for trend. Overall, the end-of-week summary has drifted down to a neutral position (11-bear and 11-bull) over the last week and it wasn’t overly bullish last week. 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%.
-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.
-Issues advancing on the NYSE (Breadth) compared to the S&P 500.
-Buying Pressure minus Selling Pressure is rising.
-Short-term new-high/new-low data.
-The size of up-moves has been larger than the size of down-moves over the last month.
-VIX.
-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.
 
NEUTRAL
-There have been 3 Distribution Days this week and one on 30 June since the last Follow-thru day. That’s 4 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.
-The S&P 500 is 11.5% below its 200-dMA. (Bull indicator is 12% below the 200-day, although this is based on “normal” pullbacks.)
-The smoothed advancing volume on the NYSE is rising.
-Sentiment.
-Bollinger Bands
-RSI
-The Smart Money (late-day action) is mixed.
-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 3-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.
-There have been 9 up-days over the last 20 sessions –neutral.
-There have been 5 up-days over the last 10 sessions – neutral.
-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
-Utilities (XLU) are outperforming the S&P 500, but not by much.
 
BEAR SIGNS
-The 50-dMA percentage of issues advancing on the NYSE (Breadth) is below 50.
-The 100-dMA percentage of issues advancing on the NYSE (Breadth) is below 50%
-The 50-dMA percentage of issues advancing on the NYSE (Breadth) has been below 50% for more than 100 consecutive days. (3 days in a row is my “correction-now” signal)
-My Money Trend indicator was falling all week.
-Long-term new-high/new-low data.
-Slope of the 40-dMA of New-highs is down. This is one of my favorite trend indicators.
-The graph of the 100-day Count (the 100-day sum of up-days) is headed down.
-Cyclical Industrials (XLI-ETF) are under-performing the S&P 500.
-There were three 90% Down-volume days 9-16June. These remain until cancelled by high up-volume days.
-The 5-10-20 Timer System is SELL; the 5-dEMA and 10-dEMA are both BELOW the 20-dEMA.
-45% 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 11 bear-signs and 11-Bull. Last week, there were 8 bear-signs and 14 bull-signs.
 
Today, the daily sum of 20 Indicators improved from -4 to +5 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations declined from +17 to +18. (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 improved to BUY: VOLUME & PRICE are bullish; SENTIMENT & VIX are neutral. I haven’t seen enough bottom signals to recommend buying now. I still expect the S&P 500 to test its prior low of 3667.
 
I’m a Bear, longer-term. In the short-term, I am in wait-and-see mode – we need to test the prior low to get a clue regarding this correction ending. While a successful test might not signal a final bottom, it could initiate some significant buying.
 
BEST ETFs - MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs (Ranked Daily)
All of the ETFs I track are below their 120-dMAs, so my chart methodology is not valid. Top four ETF ranking follows:
(1)  IBB (2) XLV (3) XLU (4) DVY These are conservative, “investors-are-playing-defense,” leaders.
*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 improved to BUY – that’s a surprise, but I’m still leery that today was just a mini, blow-off after 4 straight, down-days.
 
(Market Internals are a decent trend-following analysis of current market action, but should not be used alone for short term trading. They are usually right, but they are often late.  They are most useful when they diverge from the Index.) 
 
 

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.
 
You may wish to have a higher or lower % invested in stocks depending on your risk tolerance. 50% is a conservative position that I consider fully invested for most retirees.