PPI ... Jobless Claims ... Philadelphia Fed Index ... Jobless Claims ... Momentum Trading DOW Stocks & ETFs … Stock Market Analysis ...
Today was a travel day so this post is late. Friday is a busy day,too, so I may have to post later than
usual. We’ll see.
HOUSING STARTS / PERMITS (CNN)
“US home building fell again in January, marking five
straight months of declines, even as mortgage rates moderated and inflation
cooled. Housing starts, a measure of new home construction, fell by 4.5% in
January from December. That’s down 21.4% from a year ago...” Story at...
https://www.cnn.com/2023/02/16/homes/new-home-starts-january-2023/index.html
PPI (CNBC)
“Inflation rebounded in January at the wholesale level,
as producer prices rose more than expected to start the year, the Labor
Department reported Thursday. The producer price index, a measure of what raw
goods fetch on the open market, rose 0.7% for the month, the biggest increase
since June... On a 12-month basis, headline PPI increased 6%, still elevated
but well off its 11.6% peak in March 2022.” Story at...
https://www.cnbc.com/2023/02/16/producer-price-index-january-2023-.html
JOBLESS CLAIMS (Reuters)
“The number of Americans filing new claims for
unemployment benefits unexpectedly fell last week, offering more evidence of
the economy's resilience despite tighter monetary policy... The number of
Americans filing new claims for unemployment benefits unexpectedly fell last
week, offering more evidence of the economy's resilience despite tighter
monetary policy.” Story at...
https://www.reuters.com/markets/us/us-weekly-jobless-claims-fall-monthly-producer-prices-rebound-2023-02-16/
PHILADELPHIA FED INDEX (Philadelphia FED)
“Manufacturing activity in the region continued to
decline, according to the firms responding to the February Manufacturing Business
Outlook Survey. The general activity index declined further, the
new orders index remained negative, and the shipments index remained positive
but low. The employment index declined but remained positive, and the price
indexes continued to suggest overall increases but were in line with long-run
averages. Most of the survey’s future indicators were positive but low,
suggesting tempered expectations for growth over the next six months...The
diffusion index for current activity fell from a reading of -8.9 last month to
-24.3 this month...its sixth consecutive negative reading and lowest reading
since May 2020.” Report at...
https://www.philadelphiafed.org/surveys-and-data/regional-economic-analysis/mbos-2023-02
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 fell about 1.4% to 4090.
-VIX jumped up about 11% to 20.17.
-The yield on the 10-year Treasury rose to 3.888%.
PULLBACK DATA:
-Drop from Top: 13.5% as of today. 25.4% max (on a
closing basis).
-Trading Days since Top: 282-days.
The S&P 500 is 3.7% ABOVE its 200-dMA & 2.9%
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:
XLK – Technology ETF.
XLE – Energy Sector ETF. It hasn’t been doing much
recently, but Russia is cutting production and that should help the
sector. WE have a good dividend in the
meantime.
BA – (Boeing) I am late on this one, but we’ll see.
XLY - Consumer Discretionary ETF.
SOLD
QLD – (2xNas 100) - 11.5% gain.
SSO – 2x S&P 500 – 8.5% gain.
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 sold my leveraged positions around 2pm today, before
the big plunge in the afternoon. I wish
I could say I saw the afternoon decline coming, but it was mostly dumb
luck. What bothered me today was the
continuing decline in the short-term breadth. I measure short-term breadth as
the 10-dMA of the % of issues advancing on the NYSE. When that falls below 50%, I get concerned. Today
was the 5th day in the last 6 sessions below 50%. At the same time, the S&P
500 hasn’t done much in the last 2 weeks except oscillate up and down. Stalled
markets often fall.
Conversely, long-term breadth (100-dMA) continues to
rocket higher as comparisons over the last 100-days are much better now.
The financial press is all about explaining today’s
decline. It’s because of PPI, Fed Governors calling for higher rate hikes,
falling growth expectations, etc. That’s
all well and good, but if those are the reasons, why has breadth been falling since
mid-January? My point is that markets have been declining for technical reasons
– the market got ahead of itself with large gains in a short time. It will take some time to digest those gains.
Could the news cause this weakness to morph into a more serious event? Sure,
but I won’t get worried yet.
The S&P 500, 200-dMA is falling again so no bullish
sign there.
There are a number of bear signs now, but there are bull
signs too. The Fosback new-high, new-low
Logic Index is still bullish on multiple time frames and that can be a good
indicator at turning points. Since it is still bullish, this doesn’t look like
a major turning point.
Today was a statistically significant down-day. That just
means that the price-volume move exceeded my statistical parameters. Statistics
show that a statistically-significant, down-day is followed by an up-day about
60% of the time.
My Friday run-down of indicators will be interesting.
Today, the daily spread of 20 Indicators (Bulls minus
Bears) declined from +3 to -1 (a positive number is bullish; negatives are
bearish); the 10-day smoothed sum that smooths the daily fluctuations declined
from +63 to +49. (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 declined
to HOLD: PRICE is positive; VIX & SENTIMENT are neutral; VOLUME is negative.
(The important BUY in this indicator was on 21 October,
7-days after the bottom. For my NTSM overall signal, I suggested that a
short-term buying opportunity occurred on 27 September (based on improved
market internals on the retest), although without market follow-thru, I was
unwilling to call a buy; however, I did close shorts and increased stock
holdings. I issued a Buy-Signal on 4 October, 6-days before the final bottom,
based on stronger market action that confirmed the market internals signal.)
Bottom line: I’m remain a BULL, although somewhat more
cautious.
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
THURSDAY MARKET INTERNALS
(NYSE DATA)
My basket of Market Internals remained SELL. (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 65% 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.
