FED Rate Decision ... ADP Employment ... ISM non-Manufacturing ... Momentum Trading ... DOW Stocks & ETFs … Stock Market Analysis ...

 
“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
“I cannot agree to vote for a full increase in the debt without any assurance that steps will be taken early next year to reduce the alarming increase in the deficits and the debt.” - Senator Joe Biden, October 1984. Biden now opposes exactly what he supported in 1984. Politicians...don’t you just love ‘em?
 
I may miss Thursday’s blog post and Friday’s post will be on Saturday. Too busy.
 

FOMC RATE DECISION (WSJ)
“The Federal Reserve approved another quarter-percentage-point interest-rate increase and signaled it could be done lifting rates after that. The decision Wednesday marked the Fed's 10th consecutive rate increase aimed at battling inflation and will bring its benchmark federal-funds rate to a range between 5% and 5.25%, a 16-year high.” Story at...
https://www.wsj.com/livecoverage/federal-reserve-meeting-interest-rate-hike-expected-may-2023
My cmt: Markets were up until about 2:30 when they sharply declined. I didn’t see Powell’s press conference.   I can only guess that perhaps since he left future hikes on the table, markets didn’t like it.  We also have plenty of Debt Ceiling worries since Biden is refusing to negotiate and Republicans seem firm in their position that cuts in spending are required.
 
ADP EMPLOYMENT (ADP via prnewswire)
“Private sector employment increased by 296,000 jobs in April and annual pay was up 6.7 percent year-over-year, according to the April ADP® National Employment Report™ produced by the ADP Research Institute® in collaboration with the Stanford Digital Economy Lab ("Stanford Lab")...’Employers are hiring aggressively while holding pay gains in check as workers come off the sidelines. Our data also shows fewer people are switching jobs.’" Press release at...
https://www.prnewswire.com/news-releases/adp-national-employment-report-private-sector-employment-increased-by-296-000-jobs-in-april-annual-pay-was-up-6-7-301814559.html
My cmt: 296,000 jobs was much higher than expected.
 
ISM NON -MANUFACTURING (ISM)
“The April Manufacturing PMI® registered 47.1 percent, 0.8 percentage point higher than the 46.3 percent recorded in March. Regarding the overall economy, this figure indicates a fifth month of contraction after a 30-month period of expansion.” Press release at...
https://www.ismworld.org/supply-management-news-and-reports/reports/ism-report-on-business/pmi/april/
 
CRUDE INVENTORIES (EIA)
“U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 1.3 million barrels from the previous week. At 459.6 million barrels, U.S. crude oil inventories are about 2% below the five year average for this time of year.” Report at...
https://ir.eia.gov/wpsr/wpsrsummary.pdf
 
LESS RECESSION TALK DURING CONFERENCE CALLS (msn.com)
“Terms related to an economic downturn have been uttered less on quarterly earnings calls in the past few weeks than in the previous few reporting seasons, according to a Reuters analysis of S&P 500 conference call transcripts.
Reports for the first quarter broadly point to shrinking profits for the U.S.' largest companies but less than analysts feared.” Story at...
Recession talk tapers off on latest quarterly conference calls (msn.com)
 
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 slipped about 0.7% to 4091.
-VIX rose about 3% to 18.33.
-The yield on the 10-year Treasury slipped to 3.359%.
 
PULLBACK DATA:
-Drop from Top: 14.7% as of today. 25.4% max (on a closing basis).
-Trading Days since Top: 334-days.
The S&P 500 is 3.1% ABOVE its 200-dMA and 1.3% 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 and we called a buy on 4 October 2022.
 
MY TRADING POSITIONS:
I am not trading as much as in the past. You may wish to use the momentum charts and/or the Monday 40-day gain charts for trading the Dow stocks and ETFs.
XLK – Technology ETF.
XLE – Energy Sector ETF. It been sagging recently on lower oil prices. 
 
BA – Boeing reported 4/26/2023. It had good numbers and gave good guidance.  While BA bounced on the news, it is down about 1% since it reported.
 
XLY - Consumer Discretionary ETF.
KRE – Regional Banking ETF. This is a small position for me.
SHY – Short term bonds. 30-day yield is 4%. (Trailing 1-year yield is 1.6%.) I’ll hold this, but if the market retests the lows, I’ll sell it and buy stocks.)
 
TODAY’S COMMENT:
The 50-dMA of issues advancing on the NYSE moved above 50% today in the morning.  That’s been a worry; breadth has been poor. Breadth was positive before today’s Fed meeting, but didn’t remain there after it. So this indicator remained bearish.
 
There was plenty more to be unhappy about.  The markets didn’t rally on the good news (the Fed seems to be pausing), but instead, sold off. When markets respond to good news with a selloff, it’s bearish. The S&P 500 is only 1.3% above its 50-dMA.  That’s now a worry.  I will cut stock holdings if the Index drops below its 50-dMA for consecutive days. (Lance Roberts says it must stay below the 50-dMA for 5 trading days to signal a change in trend. Maybe consecutive days are too short?) Let’s hope markets don’t go there so I won’t have to make a decision.                        

                                                                                       
I didn’t buy stocks today even though the Fed seems to be on hold – I didn’t like the price action.
 
While I am being negative, let’s pile it on: There was a Hindenburg Omen today.  Investopedia says:
-“The Hindenburg Omen is a technical indicator that was designed to signal the increased probability of a stock market crash.
-It compares the percentage of new 52-week highs and lows to a predetermined reference percentage.
-In practice, the Hindenburg Omen is not always correct, but it may be used with other forms of technical analysis to decide when it's time to sell.” From...
https://www.investopedia.com/terms/h/hindenburgomen.asp
I don’t think I’ll panic yet.  It’s just one more worry.
 
Today, the daily spread of 20 Indicators (Bulls minus Bears) improved slightly from -8 to -7 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations declined from -26 to -35. (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: PRICE is positive; SENTIMENT, VIX & VOLUME are neutral.
 
(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. The NTSM sell-signal was issued 20 December, 8 sessions before the high of this recent bear market, based on the bearish “Friday Rundown” of indicators.)
 
Bottom line: I am still a cautious Bull. Indicators are not that bad, in spite of the Hindenburg Omen.
 
ETF - 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 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 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.