Best DOW Stocks ... Best ETFs … Stock Market Analysis ... ISM Non-Manufacturing Index

 
“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
ISM NON-MANUFACTURING INDEX (ISM via PRnewswire)
“Economic activity in the services sector grew in August for the 27th month in a row...The report was issued today by Anthony Nieves, CPSM, C.P.M., A.P.P., CFPM, Chair of the Institute for Supply Management® (ISM®) Services Business Survey Committee: ‘In August, the Services PMI® registered 56.9 percent, 0.2 percentage point higher than July's reading of 56.7 percent... Growth continues — at a slightly faster rate — for the services sector, which has expanded for all but two of the last 151 months. The services sector had a slight uptick in growth for the month of August due to increases in business activity, new orders and employment.’” Press release at...  
https://www.prnewswire.com/news-releases/services-pmi-at-56-9-august-2022-services-ism-report-on-business-301617838.html
 
COLLEGE LOAN FORGIVENESS REVEALS BIDEN’S CONSTITUTIONAL CYNICISM (Jonathan Turley Blog)
“President Biden just wiped out what is estimated to be $1 trillion owed to the country [per the Wharton School of Business] — the size of the Reagan budget — without a single vote, let alone approval, by Congress. The idea of a president giving away such a fortune with the stroke of a pen should alarm every American. Not only will the massive payout likely fuel inflation but critics have objected to having working-class people subsidize the debts of college-educated citizens...This is not supposed to happen in a constitutional system based on shared, limited powers: The Constitution gives Congress the power of the purse, but Biden just gave away the store.”  – Professor Jonathan Turley, honorary Doctorate of Law from John Marshall Law School. Commentary at...
https://jonathanturley.org/2022/09/02/college-loan-forgiveness-plan-reveals-bidens-constitutional-cynicism/
Who made Biden King? He accuses Trump of threatening Democracy while he ignores it.
 
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 fell about 0.4% to 3908.
-VIX rose about 6% to 26.91.
-The yield on the 10-year Treasury climbed to 3.355%.  
 
PULLBACK DATA:
-Drop from Top: 18.5% as of today. 23.6% max.
-Trading Days since Top: 169-days.
The S&P 500 is 8.8% Below its 200-dMA & 2.8% Below its 50-dMA.
- Support points for the rally are around 3900, the early July highs (pretty much where we closed today) 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:
The following chart is a comparison of present VIX in 2022 (in White) and VIX in 2006-2008 (Blue). If the analog is good, the VIX will follow the blue line and result in a large drop in the S&P 500. The Financial crash of 2006-2008 was caused by a completely different set of circumstances. Chart wise, crashes do seem to follow a pattern so it is plausible that a crash might be coming. We must also remember that the past does not cause the present, so a crash from here is not guaranteed and certainly not by this one chart. On the other hand...
 

My guess is that we will see a crash, but I plan to follow indicators and see where the downturn takes us.
 
Distribution Days are supposed to track when institutional investors are selling. I’ve never been completely convinced of that, but they do seem to be a bearish indicator, especially when we see enough of them. Today we hit the limit. There have been 6 Distribution Days in the last 12 sessions.  6 in 5-weeks is a bearish sign; this time, it occurred twice as fast.
 
The 50-dMA of issues advancing on the NYSE dropped below 50% today. Three-in-a-row below 50% would give a “correction now” signal. Oh wait...we’re already in a correction. Now, I suppose it is just another bearish sign.
 
There are some oversold indications (RSI, advance/decline ratio), but I think we remain in a selling stampede. We noted earlier that selling stampedes usually last 17 – 25 sessions, with only 1.5- to three-day pauses/throwback rallies, before they exhaust themselves on the downside. As of Monday, this stampede down has lasted 13-days. My guess, there’s more to come this week.
 
Today, the daily sum of 20 Indicators improved from +4 to +6 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations improved from -9 to -1. (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 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.
 
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

TUESDAY MARKET INTERNALS (NYSE DATA)

My basket of Market Internals remained NEUTRAL.
 
(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.