“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
“For decades we disagreed with [Supreme] Court rulings
when progressives held sway, but we never called the Court illegitimate. But
now that the left has lost the Court as a backup legislature for its policy
goals, the institution is supposedly broken. Tell us again who is the threat to
democratic institutions?” – WSJ Editorial Board.
RETAIL SALES (CNBC)
“Retail and food services sales were little changed for the month after rising 0.4% in August, according to the advance estimate from the Commerce Department. That was below the Dow Jones estimate for a 0.3% gain.” Story at...
https://www.cnbc.com/2022/10/14/retail-sales-september-2022.html
UNIV OF MICHIGAN SENTIMENT (Univ of Michigan)
“Consumer sentiment is essentially unchanged at 1.2 index points above September, in spite of a 23% improvement in current buying conditions for durables owing to an easing in supply constraints. Sentiment is now 9.8 points above the all-time low reached in June but this improvement remains tentative, as the expectations index declined by 3% from last month.” Report at...
http://www.sca.isr.umich.edu/
HERITAGE CAPITAL COMMENTARY (Heritage Capital)
“I was looking for a big down opening that was rejected and we sure got that [Thursday with wild market swings]...This is definitely not normal behavior, but this kind of action is usually seen during the bottoming process. Again, it’s a process not a point in time. And as you also know I have been crystal clear both here and in the media that midterm election years typically see major bottoms, especially in Q4 and mostly in October, when they has been a significant decline. One single day will not dictate that, but it just adds to evidence... Stock and bond market behavior in the coming days will be important. Thursday’s low must, must, must hold. We need to see the 2-Year Note stop going up and then start to back off.” - Paul Schatz, President Heritage Capital. Commentary at...
https://investfortomorrow.com/blog/bells-may-not-be-ringing-but-they-are-being-polished/
MARKET REPORT / ANALYSIS
-Friday the S&P 500 fell about 2.4% to 3583.
-VIX rose about 0.3% to 32.02.
-The yield on the 10-year Treasury rose to 4.024%.
PULLBACK DATA:
-Drop from Top: 25.3% as of today. 25.4% max (on a closing basis).
-Trading Days since Top: 196-days.
The S&P 500 is 13.9% Below its 200-dMA & 8.9% Below its 50-dMA.
*I won’t call the correction over until the S&P 500 makes a new-high; however, evidence suggests the bottom was/is in the 3600 area and I am fully invested with a higher percentage of stocks than normal.
MY TRADING POSITIONS:
DDM – 2x Dow 30
CVX – (I may hold this as a long-term position. I already
owned a small position in CVX.)
SPY – S&P 500 (I may hold this as a long-term position.)
IWM - Russell 2000. (I may hold this as a long-term position.)
TODAY’S COMMENT:
I would like to have seen some follow through from Thursday’s big reversal (down in the AM and rally afterward), but the other possibility was profit taking and that’s what we got. Still, today’s low didn’t fall below yesterday’s intraday low, and that’s a positive on a bad day. We did get a strong bull sign though and it was an important one.
The 52-week, New-high/new-low spread (new-highs minus new-lows)
improved by 3.5 standard deviations today. More simply, the spread between
new-highs and new-lows improved by 716 today. That big of a reversal has only
happened once before in this correction; generally, it tends to happen within a
few days after a bottom. VIX also gave us a perspective on the day’s action.
In spite of the big down-day Friday, the VIX was
essentially flat. The option crowd still
seems to think there is a rally coming.
The S&P 500 tested its 12 Oct low today. Internals
were not as good; that usually warns that there could be lower lows
coming. The good news is that today was another successful test when
compared to the June lows. The Index is
definitely in a bottoming pattern. I think we’ve seen the bottom, but we’ll have
to wait for more confirmation.
On Fridays, I summarize a number of indicators to get a
weekly feel for trend. The Friday rundown of indicators improved, but remained
slightly bullish to neutral (15-bear and 16-bull). These indicators tend to be
both long-term and short-term, so they are different than the 20 that I report
on daily.
Indicators have been slowly improving for the last three
weeks. Details follow:
BULL SIGNS
-There was a Follow-Thru Day 13 October that canceled prior Distribution Days.
-MACD of S&P 500 price made a bullish crossover 13 Oct.
-My Money Trend indicator.
-Short-term new-high/new-low data.
-The 52-week, New-high/new-low ratio improved by 3.5 standard deviations. More simply, the spread between new-highs and new-lows improved by 716 today. That’s another solid bottom sign.
-There have been 5 Statistically-Significant days (big moves in price-volume) in the last 15-days. This can be bullish or bearish. Since the Index is at a bottom, I’ll call it bullish.
-Issues advancing on the NYSE (Breadth) compared to the S&P 500 are bullish. (Breadth is ahead of the Index.)
-The longer-term, 50-dEMA, Fosback Hi-Low Logic Index is Bullish.
-There have only been 5 up-days over the last 20 sessions.
-On average, the size of up-moves has been larger than the size of down-moves over the last month.
-13 Oct was a Bullish Outside Reversal Day.
-Cyclical Industrials (XLI-ETF) are outpacing the S&P 500.
-Sentiment.
-28 Sept and 3 and 4 Oct were all bullish 90% up-volume days. (7 Oct there was a 90% down-volume day, but the close was not within the lower 10% of the day’s range, so it won’t negate the bullish 90% up-volume day on 4 October.)
-The S&P 500 is 13.9% below its 200-dMA. (Bull indicator is 12% below the 200-day, although this is based on “normal” pullbacks.)
-S&P 500 is outperforming the Utilities (XLU).
NEUTRAL
-Bollinger Bands.
-The short-term, 10-day, Fosback Hi-Low Logic Index.
-There have been 3 up-days over the last 10 sessions – leaning bullish, but neutral.
-Overbought/Oversold Index (Advance/Decline Ratio).
-RSI
-The Calm-before-the-Storm/Panic Indicator warned on 13 September - expired.
-There was an Inverse Zweig Breadth Collapse (negative Breadth Thrust) 21 June. That’s a rare, very-bearish sign, but it was several-weeks ago - expired.
-There was a Hindenburg Omen signal 8 April – it was canceled when the McClellan Oscillator turned bullish.
-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
BEAR SIGNS
-The 10-dMA percentage of issues advancing on the NYSE (Breadth) is below 50%.
-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 3 days in a row below 50% for my “correction-now” signal. – It hardly matters now.
-Long-term new-high/new-low data.
-The smoothed advancing volume on the NYSE is falling.
-MACD of the percentage of issues advancing on the NYSE (breadth) made a bearish crossover 30 Aug.
-Smoothed Buying Pressure minus Selling Pressure is falling. (While it’s falling, there is a strong bullish divergence when today’s values are compared to the June lows.)
-McClellan Oscillator is negative.
-The graph of the 100-day Count (the 100-day sum of up-days) is falling.
-The Smart Money (late-day action) is headed down.
-VIX is rising quickly.
-Slope of the 40-dMA of New-highs is falling.
-The 5-10-20 Timer System is SELL; the 5-dEMA and 10-dEMA are both below the 20-dEMA. (The 5-day is below the 10-day so short-term momentum is bearish too.)
- Only 42% 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 15 bear-signs and 16-Bull. Last week, there were 15 bear-signs and 11
bull-signs. Friday indicators are leaning slightly to the bull side.
Today, the daily sum of 20 Indicators improved from +6 to
+9 (a positive number is bullish; negatives are bearish); the 10-day smoothed
sum that smooths the daily fluctuations improved from +35 to +46. (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 to HOLD: VIX is bearish; PRICE & SENTIMENT are
bullish; VOLUME is neutral.
Bottom line: I’m a Bull: I’m now invested with about 70%
of the portfolio invested in stocks. I added a leveraged long position (DDM –
2xDow) 13 Oct based on strong bullish signs. (As a retiree, 50% invested in
stocks is my “normal” portfolio.)
BEST ETFs - MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs (Ranked Daily)
ETF ranking follows:
The top ranked ETF receives 100%. The rest are then ranked based on their momentum relative to the leading ETF.
#1. XLE #2. IBB #3. XLV
*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)
DOW 30 momentum ranking follows:
#1. CVX #2. AMGN #3. MRK
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 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 current invested
position is about 70% stocks, including stock mutual funds and ETFs. I’m
usually about 50% invested in stocks. I’ll cut back on stocks if we see serious
bear signs.
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.
“Retail and food services sales were little changed for the month after rising 0.4% in August, according to the advance estimate from the Commerce Department. That was below the Dow Jones estimate for a 0.3% gain.” Story at...
https://www.cnbc.com/2022/10/14/retail-sales-september-2022.html
“Consumer sentiment is essentially unchanged at 1.2 index points above September, in spite of a 23% improvement in current buying conditions for durables owing to an easing in supply constraints. Sentiment is now 9.8 points above the all-time low reached in June but this improvement remains tentative, as the expectations index declined by 3% from last month.” Report at...
http://www.sca.isr.umich.edu/
“I was looking for a big down opening that was rejected and we sure got that [Thursday with wild market swings]...This is definitely not normal behavior, but this kind of action is usually seen during the bottoming process. Again, it’s a process not a point in time. And as you also know I have been crystal clear both here and in the media that midterm election years typically see major bottoms, especially in Q4 and mostly in October, when they has been a significant decline. One single day will not dictate that, but it just adds to evidence... Stock and bond market behavior in the coming days will be important. Thursday’s low must, must, must hold. We need to see the 2-Year Note stop going up and then start to back off.” - Paul Schatz, President Heritage Capital. Commentary at...
https://investfortomorrow.com/blog/bells-may-not-be-ringing-but-they-are-being-polished/
-Friday the S&P 500 fell about 2.4% to 3583.
-VIX rose about 0.3% to 32.02.
-The yield on the 10-year Treasury rose to 4.024%.
-Drop from Top: 25.3% as of today. 25.4% max (on a closing basis).
-Trading Days since Top: 196-days.
The S&P 500 is 13.9% Below its 200-dMA & 8.9% Below its 50-dMA.
*I won’t call the correction over until the S&P 500 makes a new-high; however, evidence suggests the bottom was/is in the 3600 area and I am fully invested with a higher percentage of stocks than normal.
DDM – 2x Dow 30
SPY – S&P 500 (I may hold this as a long-term position.)
IWM - Russell 2000. (I may hold this as a long-term position.)
I would like to have seen some follow through from Thursday’s big reversal (down in the AM and rally afterward), but the other possibility was profit taking and that’s what we got. Still, today’s low didn’t fall below yesterday’s intraday low, and that’s a positive on a bad day. We did get a strong bull sign though and it was an important one.
-There was a Follow-Thru Day 13 October that canceled prior Distribution Days.
-MACD of S&P 500 price made a bullish crossover 13 Oct.
-My Money Trend indicator.
-Short-term new-high/new-low data.
-The 52-week, New-high/new-low ratio improved by 3.5 standard deviations. More simply, the spread between new-highs and new-lows improved by 716 today. That’s another solid bottom sign.
-There have been 5 Statistically-Significant days (big moves in price-volume) in the last 15-days. This can be bullish or bearish. Since the Index is at a bottom, I’ll call it bullish.
-Issues advancing on the NYSE (Breadth) compared to the S&P 500 are bullish. (Breadth is ahead of the Index.)
-The longer-term, 50-dEMA, Fosback Hi-Low Logic Index is Bullish.
-There have only been 5 up-days over the last 20 sessions.
-On average, the size of up-moves has been larger than the size of down-moves over the last month.
-13 Oct was a Bullish Outside Reversal Day.
-Cyclical Industrials (XLI-ETF) are outpacing the S&P 500.
-Sentiment.
-28 Sept and 3 and 4 Oct were all bullish 90% up-volume days. (7 Oct there was a 90% down-volume day, but the close was not within the lower 10% of the day’s range, so it won’t negate the bullish 90% up-volume day on 4 October.)
-The S&P 500 is 13.9% below its 200-dMA. (Bull indicator is 12% below the 200-day, although this is based on “normal” pullbacks.)
-S&P 500 is outperforming the Utilities (XLU).
-Bollinger Bands.
-The short-term, 10-day, Fosback Hi-Low Logic Index.
-There have been 3 up-days over the last 10 sessions – leaning bullish, but neutral.
-Overbought/Oversold Index (Advance/Decline Ratio).
-RSI
-The Calm-before-the-Storm/Panic Indicator warned on 13 September - expired.
-There was an Inverse Zweig Breadth Collapse (negative Breadth Thrust) 21 June. That’s a rare, very-bearish sign, but it was several-weeks ago - expired.
-There was a Hindenburg Omen signal 8 April – it was canceled when the McClellan Oscillator turned bullish.
-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
-The 10-dMA percentage of issues advancing on the NYSE (Breadth) is below 50%.
-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 3 days in a row below 50% for my “correction-now” signal. – It hardly matters now.
-Long-term new-high/new-low data.
-The smoothed advancing volume on the NYSE is falling.
-MACD of the percentage of issues advancing on the NYSE (breadth) made a bearish crossover 30 Aug.
-Smoothed Buying Pressure minus Selling Pressure is falling. (While it’s falling, there is a strong bullish divergence when today’s values are compared to the June lows.)
-McClellan Oscillator is negative.
-The graph of the 100-day Count (the 100-day sum of up-days) is falling.
-The Smart Money (late-day action) is headed down.
-VIX is rising quickly.
-Slope of the 40-dMA of New-highs is falling.
-The 5-10-20 Timer System is SELL; the 5-dEMA and 10-dEMA are both below the 20-dEMA. (The 5-day is below the 10-day so short-term momentum is bearish too.)
- Only 42% of the 15-ETFs that I track have been up over the last 10-days.
TODAY’S RANKING OF 15 ETFs (Ranked Daily)
ETF ranking follows:
The top ranked ETF receives 100%. The rest are then ranked based on their momentum relative to the leading ETF.
#1. XLE #2. IBB #3. XLV
*For additional background on the ETF ranking system see NTSM Page at…
http://navigatethestockmarket.blogspot.com/p/exchange-traded-funds-etf-ranking.html
DOW 30 momentum ranking follows:
#1. CVX #2. AMGN #3. MRK
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
(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.)
