NFIB Small Business Optimism ... Best DOW Stocks ... Best ETFs … Stock Market Analysis

 “Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
“For decades we disagreed with [Supreme] Court rulings when progressives held sway, but we never called the Court illegitimate. But now that the left has lost the Court as a backup legislature for its policy goals, the institution is supposedly broken. Tell us again who is the threat to democratic institutions?” – WSJ Editorial Board.
 
NFIB SMALL BUSSINESS OPTIMISM (NFIB)
“The NFIB Small Business Optimism Index declined 2.1 points in December to 89.8, marking the 12th consecutive month below the 49-year average of 98. Owners expecting better business conditions over the next six months worsened by eight points from November to a net negative 51%. Inflation remains the single most important business problem with 32% of owners reporting it as their top problem in operating their business...The net percent of owners raising average selling prices decreased eight points from November to a net 43% seasonally adjusted, the lowest level since May 2021...A net 24% (seasonally adjusted) of owners plan price hikes, down 10 points from November.” Press release at... 
https://www.nfib.com/content/press-release/economy/small-business-optimism-declines-as-expectations-for-better-business-conditions-worsens-in-december/
My cmt: Looks like the NFIB press release may be providing more confirmation that inflation is dropping, but I am not an expert at reading these tea leaves.
 
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 rose about 0.7% to 3919.
-VIX dropped about 6% to 20.58
-The yield on the 10-year Treasury rose to 3.621%.
 
PULLBACK DATA:
-Drop from Top: 18.3% as of today. 25.4% max (on a closing basis).
-Trading Days since Top: 256-days.
The S&P 500 is 1.8% BELOW its 200-dMA & 0.3% 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. (I now have a small profit in XLK.)
SSO – 2x S&P 500. (My indicators are improving.)
XLE – Energy Sector ETF. Low PE; good Dividend; decent momentum.
 
TODAY’S COMMENT:
The market is telling us to get more bullish.  New-lows are falling a lot. At the October low there were 464 new 52-week lows on the NYSE.  Two weeks ago, there were over 200.  Yesterday there were 9 new-lows. Today; 6.
 
Today, (Tuesday) unchanged volume was high. As I’ve often said, many believe that this indicator suggests investor confusion at market turning points. My problem is that it is frequently a false signal. Not much happened the last time we saw this indicator, but the S&P 500 is near its lower trendline and its 50-dMA. It has also gone sideways for more than a month; Looks like a bullish sign to me.
 
I am still watching the 50-dMA...
The S&P 500 closed 0.3% above its 50-dMA today, Tuesday. A second close above the 50-dMA would be a very bullish sign. I got a buy-signal 27 September.  The main reason I took profits after the buy-signal and reduced stock holdings was because the S&P 500 trended below its 50-day moving average. That negative sign seems to be fading.
 
Indicators looked good today so I added XLE (Energy Select Sector) to the portfolio. (I don’t like Asia stocks as a matter of principle so EAFE is not on my list even though it is one of the higher momentum ETFs. I am suspicious that the ITA (Aerospace & Defense) will not be able to remain the top momentum play.)
 
Today, the daily sum of 20 Indicators slipped from +13, but remains a very bullish +12 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations increased from +69 to 76. (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 slipped to HOLD: PRICE is positive; VOLUME, VIX & SENTIMENT are neutral.  I am not concerned over this change; it’s more about what happened to VIX in the past than currently.  That’s the nature of moving averages. For now, VIX is still falling.
 
Bottom line: I’m a cautious BULL at this point. I am fully invested in the markets, but not overly so. There was a successful test and buy signal 27 September, so I need to be fully invested given improving signals. I’ll boost stock holdings further if the S&P 500 can close above its 50-dMA on consecutive days (i.e., again tomorrow.)
 
I’m now have about 55% 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 and I’ll get there again if conditions look right.
 
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 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 55% stocks, including stock mutual funds and ETFs. I’m usually about 50% invested in stocks. Last week’s Friday-run-down indicator ensemble was bullish and daily signs are improving too.
 
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.