“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
FED BEIGE BOOK (US News)
“The summary of conditions will do little to change the Fed’s current plans calling for additional interest rate hikes this year, with one pegged for Jan. 31-Feb. 1 when its monetary policy committee meets...Much of the summary confirms other accounts that residential real estate activity is weak, the labor market remains strong, and that inflation has slowed...“On balance, contacts across districts said they expected future price growth to moderate further in the year ahead,” the survey said.” Story at...
https://www.usnews.com/news/economy/articles/2023-01-18/feds-beige-book-finds-economy-holding-steady-with-little-growth-expected-in-the-coming-months
PPI (CNBC)
“Prices for wholesale goods and services fell sharply in December, providing another sign that inflation, while still high, is beginning to ease.
The producer price index, which measures final demand prices across hundreds of categories, declined 0.5% for the month...” Story at...
https://www.cnbc.com/2023/01/18/wholesale-prices-fell-0point5percent-in-december-much-more-than-expected.html
RETAIL SALES (CNN News)
“US retail sales continued their fall in December, dropping by 1.1% as inflation remained high, the Commerce Department reported Wednesday. That’s the largest monthly decline since December 2021...” Story at...
https://www.cnn.com/2023/01/18/economy/retail-sales-december/index.html
INDUSTRIAL PRODUCTION (News Max)”
"Production at U.S. factories fell more than expected in December and output in the prior month was weaker than previously thought, indicating that manufacturing was rapidly losing momentum as higher borrowing costs hurt demand for goods. Manufacturing output dropped 1.3% last month...” Story at...
https://www.newsmax.com/finance/streettalk/u-s-manufacturing/2023/01/18/id/1104885/
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 fell about 1.6% to 3929.
-VIX rose about 5% to 20.34.
-The yield on the 10-year Treasury fell to 3.373%.
PULLBACK DATA:
-Drop from Top: 18.1% as of today. 25.4% max (on a closing basis).
-Trading Days since Top: 261-days.
The S&P 500 is 1.2% BELOW its 200-dMA & 0.1% 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.
MY TRADING POSITIONS:
I am doing less trading now. You may do better watching the momentum charts rather than my moves.
XLK – Technology ETF.
SSO – 2x S&P 500. (My indicators are improving.)
XLE – Energy Sector ETF. Low PE; good Dividend; decent momentum.
BA – (Boeing) I am late on this one, but we’ll see.
XLY - Consumer Discretionary ETF.
SHY – Short term bonds. 30-day yield is 4.2%. (Trailing
1-year yield is 1.3%.) I’ll hold this, but if the market retests the lows, I’ll
sell it and buy stocks.)
TODAY’S COMMENT:
I noted yesterday that the A/D (Advance / Decline) Ratio was overbought and some weakness would not be a surprise. Today, we got the weakness.
Divergence spreads today were actually bullish when we
compare them to the S&P 500 loss (1.6%). Utilities sold off hard (down 2.4%).
Consumer Staples were also down a lot (2.7%) while Consumer Discretionary was
down only 1.3%. All of these spreads are the opposite of what we would expect
if investors were worried about a coming recession. One could argue that
Utilities would sell off in expectations of higher interest rates, but that wouldn’t
explain why Consumer Staples would be down so much. So, while Melissa Lee on
CNBC was calling the end of the rally, these spreads don’t seem to support that
argument. I guess we’ll know soon enough
if stocks continue to fall hard.
The S&P 500 is still overbought on the A/D Ratio so
we could see further weakness, but I still don’t expect too much downside. It’s
all up to the earnings now as earnings season is underway.
Today, the daily sum of 20 Indicators fell from +14 to +7
(a positive number is bullish; negatives are bearish); the 10-day smoothed sum
that smooths the daily fluctuations decreased from +121 to 117. (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: VOLUME, PRICE & SENTIMENT are all positive. VIX is neutral.
(The important BUY in this indicator was on 21 October, 7-days after the bottom. My NTSM buy-signal was 27 September, based on improved internals at the retest low, about 2% before the bottom.)
Bottom line: I’m a BULL. I am over-invested in the markets.
I now have about 75% of the portfolio invested in stocks. (As a retiree, 50% invested in stocks is my “normal” portfolio.) As the rally ages, I’ll cut back toward a 50% stock allocation more suitable for my status as a retiree.
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
WEDNESDAY MARKET INTERNALS
(NYSE DATA)
My basket of Market Internals slipped to 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 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.
“The summary of conditions will do little to change the Fed’s current plans calling for additional interest rate hikes this year, with one pegged for Jan. 31-Feb. 1 when its monetary policy committee meets...Much of the summary confirms other accounts that residential real estate activity is weak, the labor market remains strong, and that inflation has slowed...“On balance, contacts across districts said they expected future price growth to moderate further in the year ahead,” the survey said.” Story at...
https://www.usnews.com/news/economy/articles/2023-01-18/feds-beige-book-finds-economy-holding-steady-with-little-growth-expected-in-the-coming-months
“Prices for wholesale goods and services fell sharply in December, providing another sign that inflation, while still high, is beginning to ease.
The producer price index, which measures final demand prices across hundreds of categories, declined 0.5% for the month...” Story at...
https://www.cnbc.com/2023/01/18/wholesale-prices-fell-0point5percent-in-december-much-more-than-expected.html
“US retail sales continued their fall in December, dropping by 1.1% as inflation remained high, the Commerce Department reported Wednesday. That’s the largest monthly decline since December 2021...” Story at...
https://www.cnn.com/2023/01/18/economy/retail-sales-december/index.html
"Production at U.S. factories fell more than expected in December and output in the prior month was weaker than previously thought, indicating that manufacturing was rapidly losing momentum as higher borrowing costs hurt demand for goods. Manufacturing output dropped 1.3% last month...” Story at...
https://www.newsmax.com/finance/streettalk/u-s-manufacturing/2023/01/18/id/1104885/
-Wednesday the S&P 500 fell about 1.6% to 3929.
-VIX rose about 5% to 20.34.
-The yield on the 10-year Treasury fell to 3.373%.
-Drop from Top: 18.1% as of today. 25.4% max (on a closing basis).
-Trading Days since Top: 261-days.
The S&P 500 is 1.2% BELOW its 200-dMA & 0.1% 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.
I am doing less trading now. You may do better watching the momentum charts rather than my moves.
XLK – Technology ETF.
SSO – 2x S&P 500. (My indicators are improving.)
XLE – Energy Sector ETF. Low PE; good Dividend; decent momentum.
BA – (Boeing) I am late on this one, but we’ll see.
XLY - Consumer Discretionary ETF.
I noted yesterday that the A/D (Advance / Decline) Ratio was overbought and some weakness would not be a surprise. Today, we got the weakness.
(The important BUY in this indicator was on 21 October, 7-days after the bottom. My NTSM buy-signal was 27 September, based on improved internals at the retest low, about 2% before the bottom.)
Bottom line: I’m a BULL. I am over-invested in the markets.
I now have about 75% of the portfolio invested in stocks. (As a retiree, 50% invested in stocks is my “normal” portfolio.) As the rally ages, I’ll cut back toward a 50% stock allocation more suitable for my status as a retiree.
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
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
