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“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 dropped about 1.4% to 3941.
-VIX rose about 7% to 22.17.
-The yield on the 10-year Treasury slipped to 3.533%.
 
PULLBACK DATA:
-Drop from Top: 17.8% as of today. 25.4% max (on a closing basis).
-Trading Days since Top: 233-days.
The S&P 500 is 2.5% BELOW its 200-dMA & 3.1% 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. I may sell DDM and replace it with SSO (2x S&P 500), but for now, the DOW 30 is still doing better than the S&P 500.
XLK – Technology ETF
 
CVX – (I may hold this as a long-term position. I already owned a small position in CVX.)
 
TODAY’S COMMENT:
The S&P 500 closed near its lower trend line so we don’t want to see it fall much further. As I’ve noted for a while, 3900 remains a key level for the S&P 500 since it represents the lower trend-line of the current up-trend.
 
Still, it isn’t a good feeling to see the markets falling quickly, even though the 3900 level has held so far.  Whether this is tax-loss-selling, as some suggest, or a more meaningful pullback remains to be seen.
 
MACD of S&P price made a bearish crossover today. Most indicators are either bullish of neutral. Short-term momentum is still bullish. RSI and Bollinger bands are neutral, but well to the oversold side of the ledger.
 
Today, the daily sum of 20 Indicators declined from +16 to +11 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations declined from +155 to 150. (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 and VOLUME are neutral; VIX, & PRICE are bullish.  (The important Buy signal from this indicator ensemble was 21 October (7 days after the low); my first buy indication was on 27 September (2% above the low) based on analysis of retests of the June low.)
 
Bottom line: I remain 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 unlikely that a retest will occur in 2022.
 
Momentum analysis indicates new leaders so I may take profits in CVX, or at least sell a portion of the position.  If 3900 doesn’t hold, I’ll consider taking profits in additional positions.  XLE has also lost its leadership position in the ETF momentum analysis.
 
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
 
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
 
TUESDAY 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 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.