“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
“Wall Street appears convinced that the half-point
retreat from the highest core inflation in 40 years, currently at 5.9%, will
encourage the Fed to “pivot” to lower rates in no time. Yet when the Federal
Funds rate has been lower than core inflation, with core inflation above even
2.5%, the Fed has never shifted to easing unless recession has pushed the
unemployment rate toward 6% or higher. It’s also worth noting that the only
bear market low in history that occurred in the midst of a Fed tightening cycle
was in 1987, at an S&P 500 forward operating P/E of less than 10, and a price/revenue
multiple less than a quarter of today’s level.” – John Hussman, Phd. (15 August
2022)
"If we elect two more senators, we keep the House
and Democrats, we’re going to get a lot of unfinished business done...We’ll
protect voting rights. We’ll pass election reform and make sure no one, no one,
ever has the opportunity to steal an election again!,” – Joe Biden, President.
No wait...what? Biden just admitted the election was stolen? OMG he is so incompetent! [No the election was not stolen! Perhaps he was referring to Trump’s phony electoral college appointees?]
"Attorney General Merrick Garland’s raid on
Mar-a-Lago has ex-President Donald Trump back in the news. That’s a problem for
Republicans, who need to move beyond him...most Republicans would rather the
ex-president go away." – NY Post. (The NY Post is a conservative
paper.)
JOBLESS CLAIMS (CNBC)
“Initial filings for unemployment insurance fell to their lowest level since late June last week, a sign that the labor market is resilient amid a slowing economy. Claims totaled a seasonally adjusted 232,000 for the week ended Aug. 27, a decline of 5,000 from the previous period and the lowest since June 25...” Story at...
https://www.cnbc.com/2022/09/01/jobless-claims-total-232000-the-lowest-level-in-two-months.html
ISM MANUFACTURING (ISM)
“The August Manufacturing PMI® registered 52.8 percent, the same reading as recorded in July. This figure indicates expansion in the overall economy for the 27th month in a row after contraction in April and May 2020. For a second straight month, the Manufacturing PMI® figure is the lowest since June 2020...” Report at...
https://www.ismworld.org/supply-management-news-and-reports/reports/ism-report-on-business/pmi/august/
CONSTRUCTION SPENDING (Trading Economics)
“Construction spending in the US fell by 0.4 percent from the previous month to a seasonally adjusted annual rate of USD 1.78 billion in July of 2022, in line with market expectations and easing from the downwardly revised 0.5 percent drop in June.” From...
https://tradingeconomics.com/united-states/construction-spending
SUPERBUBBLE HASN’T POPPED YET – WALL STREET’S BEST (Fortune)
“The current superbubble features an unprecedentedly dangerous mix of cross-asset overvaluation (with bonds, housing, and stocks all critically overpriced and now rapidly losing momentum), commodity shock, and Fed hawkishness,” Grantham [Jeremy Grantham, Billionaire Investor, Founder & Director of GMO] wrote. “Each cycle is different and unique—but every historical parallel suggests that the worst is yet to come.” Story at...
https://fortune.com/2022/08/31/jeremy-grantham-recession-economic-outlook-superbubble-hasnt-popped-yet/
FILLING GASOLINE CARS COULD BECOME CHEAPER THAN CHARGING EVs
IN THE UK (OilPrice.com)
“Due to skyrocketing energy prices, Britons could soon face higher costs for charging their electric vehicles (EVs) at home than filling up gasoline-fueled cars, The Washington Times reports...’For the U.S., this actually gets to an underlying fallacy of a lot of people that are pushing electric vehicles: they assert electric vehicles are cheaper because they assume electricity prices are going to stay cheap,’ Kenny Stein, policy director of the Institute for Energy Research, told The Washington Times.” Story at
https://oilprice.com/Latest-Energy-News/World-News/Filling-Gasoline-Cars-Could-Become-Cheaper-Than-Charging-EVs-In-The-UK.html
Gasoline costs $7.50/gallon in the UK. Here in the US, Californians can’t charge their EVs during peak hours due to electricity shortages.
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 rose about 0.3% to 3967.
-VIX dropped about 1% to 25.56.
-The yield on the 10-year Treasury rose to 3.264%.
PULLBACK DATA:
-Drop from Top: 17.3% as of today. 23.6% max.
-Trading Days since Top: 167-days.
The S&P 500 is 7.6% Below its 200-dMA & 1.3% Below its 50-dMA.
- Support points for the rally are around 3900, the early July highs, and the prior correction low of 3667. We should test the prior correction low.
*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.
SDS, 2x short S&P 500 ETF.
I have built these positions to significantly large values, although I am still not net short.
TODAY’S COMMENT:
Around 1 PM today the S&P 500 was 3920. We last saw this level back in late July. Today, the 100-dMA of the issues advancing on the NYSE (breadth) is about 48.5%. Back in July, when the Index was at the same level, 100-dMA of breadth was 46.9%. This may not sound like much difference, but it is a 100-dMA and the difference is significant. If the divergence continues, it suggests that the market may not fall much below the prior low on a retest. We could also see a higher-low rather than a true retest of the low. We can’t anticipate these things; we’ll just evaluate the data as it comes. For now, there are signs of a bounce higher.
There are bottom-signs appearing as noted yesterday. I
have a Bottom Signal now due to several oversold signals. The S&P 500 even managed
to break back upward and close up today. I think any bounce will be very short. Internals were poor today and that should limit the upside of a bounce.
A retest of the low is still in order.
Today, the daily sum of 20 Indicators slipped from +2 to -1
(a positive number is bullish; negatives are bearish); the 10-day smoothed sum
that smooths the daily fluctuations slipped from +3 to -9. (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 declined to HOLD: PRICE, SENTIMENT & VIX are neutral;
VOLUME is bearish. I 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; a retest of the prior lows (or close to the
lows) seems very likely now. It’s only about 7% below today’s close.
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
THURSDAY MARKET INTERNALS (NYSE
DATA)
My basket of Market Internals remained SELL.
(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 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.
No wait...what? Biden just admitted the election was stolen? OMG he is so incompetent! [No the election was not stolen! Perhaps he was referring to Trump’s phony electoral college appointees?]
“Initial filings for unemployment insurance fell to their lowest level since late June last week, a sign that the labor market is resilient amid a slowing economy. Claims totaled a seasonally adjusted 232,000 for the week ended Aug. 27, a decline of 5,000 from the previous period and the lowest since June 25...” Story at...
https://www.cnbc.com/2022/09/01/jobless-claims-total-232000-the-lowest-level-in-two-months.html
“The August Manufacturing PMI® registered 52.8 percent, the same reading as recorded in July. This figure indicates expansion in the overall economy for the 27th month in a row after contraction in April and May 2020. For a second straight month, the Manufacturing PMI® figure is the lowest since June 2020...” Report at...
https://www.ismworld.org/supply-management-news-and-reports/reports/ism-report-on-business/pmi/august/
“Construction spending in the US fell by 0.4 percent from the previous month to a seasonally adjusted annual rate of USD 1.78 billion in July of 2022, in line with market expectations and easing from the downwardly revised 0.5 percent drop in June.” From...
https://tradingeconomics.com/united-states/construction-spending
“The current superbubble features an unprecedentedly dangerous mix of cross-asset overvaluation (with bonds, housing, and stocks all critically overpriced and now rapidly losing momentum), commodity shock, and Fed hawkishness,” Grantham [Jeremy Grantham, Billionaire Investor, Founder & Director of GMO] wrote. “Each cycle is different and unique—but every historical parallel suggests that the worst is yet to come.” Story at...
https://fortune.com/2022/08/31/jeremy-grantham-recession-economic-outlook-superbubble-hasnt-popped-yet/
“Due to skyrocketing energy prices, Britons could soon face higher costs for charging their electric vehicles (EVs) at home than filling up gasoline-fueled cars, The Washington Times reports...’For the U.S., this actually gets to an underlying fallacy of a lot of people that are pushing electric vehicles: they assert electric vehicles are cheaper because they assume electricity prices are going to stay cheap,’ Kenny Stein, policy director of the Institute for Energy Research, told The Washington Times.” Story at
https://oilprice.com/Latest-Energy-News/World-News/Filling-Gasoline-Cars-Could-Become-Cheaper-Than-Charging-EVs-In-The-UK.html
Gasoline costs $7.50/gallon in the UK. Here in the US, Californians can’t charge their EVs during peak hours due to electricity shortages.
-Thursday the S&P 500 rose about 0.3% to 3967.
-VIX dropped about 1% to 25.56.
-The yield on the 10-year Treasury rose to 3.264%.
-Drop from Top: 17.3% as of today. 23.6% max.
-Trading Days since Top: 167-days.
The S&P 500 is 7.6% Below its 200-dMA & 1.3% Below its 50-dMA.
- Support points for the rally are around 3900, the early July highs, and the prior correction low of 3667. We should test the prior correction low.
SH, short the S&P 500 ETF.
SDS, 2x short S&P 500 ETF.
I have built these positions to significantly large values, although I am still not net short.
Around 1 PM today the S&P 500 was 3920. We last saw this level back in late July. Today, the 100-dMA of the issues advancing on the NYSE (breadth) is about 48.5%. Back in July, when the Index was at the same level, 100-dMA of breadth was 46.9%. This may not sound like much difference, but it is a 100-dMA and the difference is significant. If the divergence continues, it suggests that the market may not fall much below the prior low on a retest. We could also see a higher-low rather than a true retest of the low. We can’t anticipate these things; we’ll just evaluate the data as it comes. For now, there are signs of a bounce higher.
TODAY’S RANKING OF 15 ETFs (Ranked Daily)
http://navigatethestockmarket.blogspot.com/p/exchange-traded-funds-etf-ranking.html
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.
https://navigatethestockmarket.blogspot.com/p/a-system-for-trading-dow-30-stocks-my_8.html
