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“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
“On November 8, the American People did what I observed in a series of Constitution Day speeches this fall they had the power to do: dispossess those politicians who have betrayed them, of the power that they had vested in, and entrusted with, those politicians.” - Former federal Judge J. Michael Luttig, an appointee of former President George H. W. Bush.
 
“Donald Trump has proven himself to be dishonest, disloyal, incompetent, crude and a lot of other things that alienate so many independents and Republicans. Even a candidate who campaigns from his basement can beat him.” – Republican Representative Mo Brooks, Alabama. [Former Trump supporter.]
 
MARKET OVERREACTED TO THE CPI (msn.com /MarketWatch)
“The market seems to have gotten way out in front over this one CPI report. Everybody should just take a deep breath, calm down. We’ve got a ways to go...Rates are going keep going up and they are going to stay high for awhile until we see this inflation get down closer to our target...We’re looking at moving in paces of potentially 50 [basis points] at the next meeting or the next meeting after that...” - Federal Reserve Governor Christopher Waller. Story at...
Fed’s Waller says market has overreacted to consumer inflation data: ‘We’ve got a long, long way to go’ (msn.com)
The Fed needs to talk down the stock & bond market. They want interest rates to remain high. Markets are looking out 6-9 months so it is not really clear whether the markets overreacted.
 
UTILITIES-S&P 500 SPREAD STILL VERY BULLISH (NTSM)

Note that the spread increased at the retest of the bottom in October when compared to the June lows.  In addition, spread continues to improve showing very good outperformance by the S&P 500 when compared to the Utilities ETF, XLU. This indicator suggests the markets can go higher.
 
MARKET REPORT / ANALYSIS
-Monday the S&P 500 fell 0.9% to 3957.
-VIX rose about 5% to 23.73.
-The yield on the 10-year Treasury rose to 3.860%.
 
PULLBACK DATA:
-Drop from Top: 17.5% as of today. 25.4% max (on a closing basis).
-Trading Days since Top: 218-days.
The S&P 500 is 3% Below its 200-dMA & 4.4% ABOVE 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 in the 3600 area and I am fully invested with a higher percentage of stocks than normal.
 
MY TRADING POSITIONS:
XLI – Industrial ETF   (XLI still looks good to me. Nearly 10% of XLI is in Boeing and Caterpillar and they are both strong performers in the DOW momentum analysis.) 
QLD – 2x Nas 100
DDM – 2x Dow 30
XLK – Technology ETF
 
CVX – (I may hold this as a long-term position. I already owned a small position in CVX.)
 
TODAY’S COMMENT:

Oooohhh...another ugly close.  A down-day is not a surprise after the strong week we saw last week. Pundits on CNBC were talking about holding the 4000 and that 4000 was strong resistance.  There’s a bigger issue looming. Now, it’s probably about upcoming news, because, here we go again...Producer Price Index (PPI) will be released Tuesday at 8:30am.  Traders didn’t want to hold long positions going into the release and overall volume was down Monday.  The news will effect the markets – good news or bad. I won’t guess, we’ll have to wait and see.
 
Today, the daily sum of 20 Indicators dipped from +13 to +12 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations slipped from +82 to +81. (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 BUY: SENTIMENT is neutral; VOLUME & PRICE are bullish; VIX is neutral.  (The important Buy signal from this indicator ensemble was 21 October (7 days after the low); my first buy indication was on 21 September (2% above the low) based on analysis of retests of the June low.) 
 
Bottom line: I’m a Bull. I think the bottom was 3577 on 12 October. There is always the possibility that the markets could retest those lows, but it seems less likely that a retest will occur in 2022.
 
I’m now invested with about 75% of the portfolio invested in stocks. (As a retiree, 50% invested in stocks is my “normal” portfolio.) 75% stocks is uber-bullish and that’s as far as I’ll go.
 
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.

*For additional background on the ETF ranking system see NTSM Page at…
http://navigatethestockmarket.blogspot.com/p/exchange-traded-funds-etf-ranking.html
XLE has taken the top position in the ETF momentum index. I own CVX so I already have good exposure to energy.

BEST DOW STOCKS - TODAY’S MOMENTUM RANKING OF THE DOW 30 STOCKS (Ranked Daily)
DOW 30 momentum ranking follows:

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

MONDAY MARKET INTERNALS (NYSE DATA)

My basket of Market Internals remained BUY.
(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 75% 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.