Leading Economic Index ... Jobless Claims ... DOW Stocks ... ETFs … Stock Market Analysis ...

 
“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
LEADING ECONOMIC INDEX (Conference Board via prnewswire)
“The Conference Board Leading Economic Index® (LEI) for the U.S. decreased by 0.4 percent in July 2022 to 116.6 (2016=100), after declining by 0.7 percent in June. The LEI was down by 1.6 percent over the six-month period from January to July 2022... "The US LEI declined for a fifth consecutive month in July, suggesting recession risks are rising in the near term," said Ataman Ozyildirim, Senior Director, Economics, The Conference Board.” Press release at...
https://www.prnewswire.com/news-releases/the-conference-board-leading-economic-index-lei-for-the-us-fell-further-in-july-301608559.html
 
JOBLESS CLAIMS (CNBC)
“Initial filings for unemployment benefits declined slightly last week though they were consistent with a drift higher in layoffs that began in the spring, the Labor Department reported Thursday. Jobless claims totaled 250,000 for the week ended Aug. 13, down 2,000 from the previous week...” Story at...
https://www.cnbc.com/2022/08/18/jobless-claims-edge-lower-as-fed-looks-to-cool-labor-market.html
 
PHILADELPHIA FED INDEX (RTT News)
“After reporting contractions in Philadelphia-area manufacturing activity in the two previous months, the Federal Reserve Bank of Philadelphia released a report on Thursday showing regional manufacturing activity unexpectedly returned to growth in the month of August... The Philly Fed said its diffusion index for current activity jumped to a positive 6.2 in August from a negative 12.3 in July...” Story at...
https://www.rttnews.com/3306257/philly-fed-index-unexpectedly-indicates-return-to-growth-in-august.aspx
 
DEAD CAT BOUNCE (Fortune)
“Morgan Stanley has repeatedly argued that the recent stock market rally is nothing but a bear market trap, while Bank of America has warned that stocks have more room to fall based on historical trends. And now, even the typically more bullish wealth management offices are beginning to sound the alarm about the recent rally in stocks... Mark Haefele, chief investment officer at UBS Global Wealth Management [said]...“We would caution investors against chasing this rally...We expect renewed market volatility ahead, and we continue to recommend positioning portfolios for resilience under various scenarios.”
https://fortune.com/2022/08/17/is-stock-bear-market-rally-real-dead-cat-bounce-ubs-volatility-recession/
 
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 rose about 0.2% to 4284.
-VIX slipped about 2% to 19.56.
-The yield on the 10-year Treasury dipped to 2.883%.
 
PULLBACK DATA:
-Drop from Top: 10.7% as of today. 23.6% max.
-Trading Days since Top: 157-days.
The S&P 500 is 0.9% Below its 200-dMA & closed 8.1% Above its 50-dMA.
-Resistance points for the rally, are: (1) 4323 & 4350, the 200-dMA & upper longer-term trend line, respectively; (2) or 4370, the 62% Fibonacci retracement point for those who believe in that sort of thing.
 
The S&P 500 closed at its 57% retracement level Tuesday. 50% is about what we normally see in bounces during corrections, but that is only a rough guide.
 
*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 sum of indicators was peaking 2 weeks ago, but it dipped. Since then it has climbed to highs that have aligned with S&P 500 peaks in March and June. Those peaks were tops in previous bear market rallies.  The high in the 10-day sum of indicators now may be signaling an end to the rally. Basically, it is signaling too much of a good thing. There was another “too-much-of-a-good-thing” signal that ocurred 3 days ago.  The ratio of highs divided by lows in price-volume hit extreme high levels. Both of these signals could also be interpreted as bullish signals indicating the extreme FOMO buying so we need too look at other indicators for confirmation.
 
We still see breadth signals warning of a top: the 100-dMA of issues advancing on the NYSE remains below 50%. It was 47% at the low and improved to 50% during the rally but it has been stalled around the 50% level for the last 3 weeks. If it doesn’t improve, the rally is done.
 
Volume was about 20% below the monthly average today. Unchanged volume was again high, though not extremely high, but I don’t think the volume data proves much at this point.
 
We didn’t get a clear top-signal yet, so I suspect the market will go higher.  Whether it can break above its 200-dMA remains to be seen.
 
Today, the daily sum of 20 Indicators improved from +10 to +11 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations improved from +126 to +131. (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: VIX, PRICE & VOLUME are bullish; SENTIMENT is neutral. I still expect the S&P 500 to test its prior low of 3667. 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 are probably still in control of the markets.
 
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
Looking at the above chart, 80% of the ETFs are above their 120-dMA. That chart looks like there is no correction.
 
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
 
THURSDAY 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.) 
 
 

My stock-allocation in the portfolio is now roughly 40% invested in stocks, although technically, SSO isn’t a stock, but an options-based ETF.
 
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.