“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
“...stocks could rally for another few months before hitting a bottom. Better-than-expected earnings this quarter are masking the pain to come for the stock market, according to Morgan Stanley's top stock picker.” Story at...
The stock market could rally for another few months as upbeat earnings mask the pain to come in 2023, Morgan Stanley's Mike Wilson says (msn.com)
My cmt: There is a possibility that the markets might get back to old highs. In any event, further declines are always possible. Timing is the issue. In 1998, there was a 20% correction that ended in August. A year and a half later the stock market fell into one of its largest declines as the dot.com bubble burst. Are declines coming this January...or 2 years from now?
“On a year-over-year basis, the S&P 500 is reporting its lowest earnings growth since Q3 2020. Overall, 20% of the companies in the S&P 500 have reported actual results for Q3 2022 to date. Of these companies, 72% have reported actual EPS above estimates, which is below the 5-year average of 77% and below the 10-year average of 73%. In aggregate, companies are reporting earnings that are 2.3% above estimates, which is below the 5-year average of 8.7% and below the 10-year average of 6.5%.” Report at...
https://insight.factset.com/sp-500-earnings-season-update-october-21-2022
-Friday the S&P 500 rose about 2.4% to 3753.
-VIX dipped about 1% to 29.69. (Not much for a 2.4% gain on the S&P 500.)
-The yield on the 10-year Treasury slipped to 4.228%.
-Drop from Top: 21.8% as of today. 25.4% max (on a closing basis).
-Trading Days since Top: 199-days.
The S&P 500 is 9.2% Below its 200-dMA & 3.5% 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.
XLI – Industrial ETF
QLD – 2x Nas 100
DDM – 2x Dow 30
XLK – Technology ETF
SPY – S&P 500 (This is really a long-term position.)
IWM - Russell 2000. (This is really a long-term position.)
10-dMA of Breadth (% of stocks advancing on NYSE) improved today to 48%. That needs to continue. We really need to see the 100-dMA move above 50%. That would be strong evidence of an end to the Bear Market. We’d also need to see the S&P 500 break above its 200-dMA.
-There were few New-highs and a lot of new-lows.
-Friday, there was High unchanged volume.
-Today was a statistically significant up-day. That just means that the price-volume move exceeded my statistical parameters. Statistics show that a statistically-significant, up-day is followed by a down-day about 60% of the time. Statistically-significant, up-days almost always coincide with tops, but not all statistically-significant, up-days occur at tops. Today could be a top, but there are no top indicators warning; further, I had a buy signal less than a month ago so a top seems unlikely.
-MACD of S&P 500 price made a bullish crossover 13 Oct.
-14 October, 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. That’s another solid bottom sign.
-Issues advancing on the NYSE (Breadth) compared to the S&P 500 are bullish. (Breadth is ahead of the Index.)
-There have only been 7 up-days over the last 20 sessions.
-The longer-term, 50-dEMA, Fosback Hi-Low Logic Index is Bullish.
-On average, the size of up-moves has been larger than the size of down-moves over the last month.
-21 Oct was a Bullish Outside Reversal Day.
-Cyclical Industrials (XLI-ETF) are outpacing the S&P 500.
-17 and 18 Oct were back-to-back 80%+ up-volume days.
-S&P 500 is outperforming the Utilities (XLU).
-The smoothed advancing volume on the NYSE is rising.
-Smoothed Buying Pressure minus Selling Pressure is rising. (There is a strong bullish divergence when today’s values are compared to the June lows.)
-McClellan Oscillator.
-The Smart Money (late-day action). This suggests Pros are buying.
-There was a Follow-Thru Day 21 October that cancels prior Distribution Days.
-There have been 5 Statistically-Significant days (big moves in price-volume) in the last 15-days. (The S&P 500 is comng off a bottom and all of the days have been up.)
-My Money Trend indicator turned up today.
-Short-term new-high/new-low data.
-The S&P 500 is 9.2% below its 200-dMA. (Bull indicator is 12% below the 200-day, although this is based on “normal” pullbacks.)
-Bollinger Bands.
-RSI
-There have been 4 up-days over the last 10 sessions – leaning bullish, but neutral.
-Overbought/Oversold Index (Advance/Decline Ratio).
-The short-term, 10-day, Fosback Hi-Low Logic Index.
-Sentiment.
-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 too long 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
- 51% of the 15-ETFs that I track have been up over the last 10-days.
-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.
-MACD of the percentage of issues advancing on the NYSE (breadth) made a bearish crossover 30 Aug.
-The graph of the 100-day Count (the 100-day sum of up-days) is falling.
-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.)
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. ITA #3. IBB
http://navigatethestockmarket.blogspot.com/p/exchange-traded-funds-etf-ranking.html
DOW 30 momentum ranking follows:
#1. CVX #2. MRK #3. AMGN
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.)
