Manufacturing PMI ... Construction Spending ... Best DOW Stocks ... Best ETFs … Stock Market Analysis ...

 
“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
“Base case until proven otherwise is ongoing bear.” – Chris Ciovacco, Ciovacco Capital.
 
HIS MARKIT MANUFACTURING PMI (S&P Global)
“Manufacturing firms in the US indicated a solid decline in the health of the sector during December, according to the latest PMITM data from S&P Global... The seasonally adjusted S&P Global US Manufacturing Purchasing Managers’ Index™ (PMI™) posted 46.2 in December, down from 47.7 in November, but matched the earlier released 'flash' estimate. The latest data signalled the fastest decline in operating conditions since May 2020, and was among the sharpest since 2009.” Press release at...
https://www.pmi.spglobal.com/Public/Home/PressRelease/fd49c3c51d79418b9622ad78993a762b
 
CONSTRUCTION SPENDING (Trading Economics)
“Construction spending in the United States rose 0.2% month-over-month in November of 2022, rebounding from the downwardly revised 0.2% decline in the previous month and compared to market estimates of a 0.4% contraction. Spending on private construction rose by 0.3% from the prior month, offsetting the 0.1% decline in public construction spending.” Story at...
https://tradingeconomics.com/united-states/construction-spending
 
3^RD YEAR OF PRESIDENTIAL TERM IS SUPPOSED TO BE BULLISH (McClellan Financial Publications)
“During a typical 4-year presidential term, the stock market tends to be flattish during the first 2 years. Then the third year is nearly always an up year...[but] In physics terms, there is always a “balance of forces equation”.  The motion of the object or particle in question depends on the sum of all of those forces.  For 2023, we have the bullish force of the third year of a presidential term being met by the bearish forces of Fed rate hikes AND Fed QT.  If ever there were a condition under which the bullish tendency of the third year might not work, this is that time.” Commentary at...
https://www.mcoscillator.com/learning_center/weekly_chart/3rd_year_of_presidential_term_is_supposed_to_be_bullish/
 
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 dipped about 0.4% to 3825.
-VIX rose about 6% to 22.87
-The yield on the 10-year Treasury slipped to 3.773%.
 
PULLBACK DATA:
-Drop from Top: 20.3% as of today. 25.4% max (on a closing basis).
-Trading Days since Top: 251-days.
The S&P 500 is 4.5% BELOW its 200-dMA & 2% 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 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. (The S&P 500 is not far from its prior lows so I am holding this position, even though it is now a losing one.)
 
TODAY’S COMMENT:
New highs outpaced new-lows today.  That’s a good sign that hasn’t happened in a while. On the other hand, Tuesday was another Distribution Day and that reinforces the bear scenario.
 
It still appears that the most likely scenario will see the S&P 500 test its October lows, about 5% below today’s close.
 
Today, the daily sum of 20 Indicators improved from +7 to +11 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations increased from +35 to 45. (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 HOLD: VIX, VOLUME, PRICE & SENTIMENT are neutral. 
 
Bottom line: I’m a Bear at this point. I am defensively positioned in the markets, but not drastically so. The 50-dMA is the key for me; if the S&P 500 can climb above its 50-dMA and remain for consecutive days, I’ll be adding to stock holdings. There was a successful test and buy signal 27 September, so I need to be careful not to get too bearish. Perhaps cautious is a better word than bearish.
 
I’m now have about 40% of the portfolio invested in stocks. (As a retiree, 50% invested in stocks is my “normal” portfolio.) I was 75% invested in stocks in early December.
 
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 improved to 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 40% stocks, including stock mutual funds and ETFs. I’m usually about 50% invested in stocks. Last week’s Friday-run-down indicator ensemble was bad enough to convince me to take a more conservative view of the markets.
 
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.