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

 
“The man who is certain he is right is almost sure to be wrong.” Michael Faraday (1791-1867), inventor of the dynamo.
 
“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
JOBLESS CLAIMS (Reuters)
“The number of Americans filing new claims for unemployment benefits increased moderately last week, indicating the labor market remains tight despite the Federal Reserve's attempt to cool demand with aggressive interest rate increases... Initial claims for state unemployment benefits rose 5,000 to a seasonally adjusted 213,000 for the week ended Sept. 17...” Story at...
https://www.reuters.com/markets/us/us-weekly-jobless-claims-increase-moderately-2022-09-22/
 
LEADING ECONOMIC INDEX (Conference Board)
“The Conference Board Leading Economic Index® (LEI) for theU.S. decreased by 0.3 percent in August 2022 to 116.2 (2016=100), after declining by 0.5 percent in July.... “The US LEI declined for a sixth consecutive month potentially signaling a recession,” [said] Ataman Ozyildirim, Senior Director, Economics, at The Conference Board.”  

Press release and charts at...
https://www.conference-board.org/topics/us-leading-indicators/press/us-lei-sept-2022
 
ANOTHER LOST DECADE (The Felder Report)
"There's a high probability in my mind that the market, at best, is going to be kind of flat for 10 years, sort of like this '66 to '82 time period." - Legendary hedge fund manager Stan Druckenmiller...As a result, investors are likely going to have to do more than just passively buy and hold a broad stock market index if they want to avoid a prolonged period of negative real returns.” Commentary at...
https://thefelderreport.com/2022/09/21/are-investors-staring-down-another-lost-decade-in-the-stock-market/
 
OFF TOPIC
Today, the NY Attorney General charged Trump with robbing banks and murdering several people.  Sean Hannity, Conservative talk-show host, said Jesse James was a Democrat and he robbed banks and killed people so Trump’s actions weren’t so bad...Not really, but that’s the argument the Trump apologists are making regarding Trump’s theft of Top Secret (and higher) documents. Still, more holdout Republicans are giving up on Trump...that’s a good thing. More Democrats are giving up on Biden; that’s good too.  The last thing this country needs is another Biden-Trump election.
 
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 fell about 0.8% to 3758.
-VIX went against trend and dipped about 2% to 27.35.
-The yield on the 10-year Treasury rose to 3.715%.  
 
PULLBACK DATA:
-Drop from Top: 21.7% as of today. 23.6% max (on a closing basis).
-Trading Days since Top: 181-days.
The S&P 500 is 11.4% Below its 200-dMA & 7% Below its 50-dMA.
Support looks like the prior low, 3667.
 
*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:
Ideally, a test of a prior low occurs at a lower level in price. The S&P 500 needs to drop 1.9% further to test its low. If we don’t get a lower-low, we can only look at the nature of any rally that might occur and consider whether the signs are bullish enough to buy. No test yet, but I’ll be vigilant.  
 
There aren’t too many bull-signs today, tomorrow’s Friday run-down of indicator should be interesting,
 
There was ANOTHER Distribution Day today, Thursday.  That makes 12 in the last 25 sessions. 6 is considered bearish, so this is very bearish. “A distribution day is when a market representative index...[in my case the S&P 500] loses more than 0.2% in a trading session, with volume higher than that of the previous session.” - https://marketsmithindia.com/post/is-this-a-market-top-distribution-days-give-an-idea
Distribution Days are thought to indicate that the big money is selling.
 
As noted previously, Wednesday was a Bearish Outside Reversal Day. “An outside reversal is a price pattern that indicates a potential change in trend on a price chart. The two-day pattern is observed when a security’s high and low prices for the day exceed the high and low of the previous day’s trading session.” For more, see....
https://www.investopedia.com/terms/o/outsidereversal.asp
We’ve been in a downtrend since mid-August.  This signals more of the same.
 
Today, the daily sum of 20 Indicators declined from -11 to -12 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations declined from -18 to -31. (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 SELL: VOLUME & VIX are bearish; SENTIMENT & PRICE are neutral. 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) is near.
 
I may cover short positions soon. We may see a bounce even if the retest fails or is inconclusive.
 
BEST ETFs - MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs (Ranked Daily)
None of the ETFs I track are above their 120-dMA so the chart is no good. ETF ranking follows:
#1 XLU; #2. XLY #3. 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
 
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.