“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
IHS MARKIT COMPOSITE PMI (S&P Global US Composite
PMI)
“Companies in the US registered a solid upturn in business activity during May, according to the latest ‘flash’ PMI™ data from S&P Global. Overall growth in output was the fastest for just over a year. The expansion was led by service providers, however, as manufacturers recorded only a slight rise in production. The headline S&P Global Flash US PMI Composite Output Index registered 54.5 in May, up from 53.4 in April, to signal a solid and faster expansion in private sector business activity. The rise in output was the sharpest since April 2022, but led by service providers, who reported stronger demand conditions. Although manufacturers registered growth in production, it was only marginal and slowed from the previous survey period.” Report at...
https://www.pmi.spglobal.com/Public/Home/PressRelease/fb16b048c1ca4d659e136ae0c52faaa2
My cmt: What recession? It’s not in this report.
TALKING DEBT CEILING (Heritage Capital)
“While everyone knows the debt ceiling will be raised this time as it has all previous times, it is one of the few times where the opposition party has some power. Although these types of negotiations belong in the budget process, the party in power never seems to want the minority to engage at that point because a simple majority wins that vote. It is painful to watch, but it’s still the best system around. Democrats point to three straight, clean debt ceiling increases under Donald Trump. Republicans counter that Joe Biden and Chuck Schumer are both on record as demanding negotiations and compromise when they were Senators from the minority party...worst case, I can see a BREXIT type decline, 4-6% in short, sharp fashion. If that occurs, buy it with both hands.” Commentary at...
https://investfortomorrow.com/blog/still-talking-debt-ceiling-but-pga-was-the-story/
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 fell about 1.1% to 4146.
-VIX rose about 8% to 18.53.
-The yield on the 10-year Treasury dipped slightly to 3.701%.
PULLBACK DATA:
-Drop from Top: 13.6%. 25.4% max (on a closing basis).
-Trading Days since Top: 348-days.
The S&P 500 is 4.3% ABOVE its 200-dMA and 1.5% 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.
MSFT – Microsoft.
XLK – Technology ETF.
XLE – Energy Sector ETF. XLE tested its March low on 16 May on lower volume so I continue to hold it. XLE is up about 4% since then.
XLY - Consumer Discretionary ETF.
KRE – Regional Banking ETF. This is a very small position
for me. KRE tested the May 4 low of 36.08 on much lower volume 11 & 12
May. It’s up about 10% since then.
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:
Listen to the Pundits on CNBC and you would be sure that high PEs will derail the current rally. PEs are nowhere near extremes we saw in 2000 before the dot.com crash. Now, there are more investors chasing fewer stocks so PEs can go much higher than seems reasonable. I don’t think we are in a bubble yet.
Divergences mentioned during the CNBC Halftime Report are
more troubling. Only certain sectors
have been pulling this market along and breadth has been weak, according to the
pundits. I’ve mentioned one sign of divergence over the last couple of days; issues
advancing on the NYSE (Breadth) vs. the S&P 500 is still leaning bearish.
Currently, the S&P 500 is advancing too far ahead of other issues on the
NYSE. That’s a concern, but Breadth has been improving.
The 50-dMA of issues advancing on the NYSE improved and
has now risen above 50%. The 10-dMA of issues advancing on the NYSE was 53% 3
days ago although it has dipped to 49.6% today.
The point here is that overall breadth has been improving. Small caps
(Russel 2000) have outperformed other issues over the last few days.
I don’t see any reason why markets can’t go higher, other
than Debt Ceiling angst; we just have to wait and see where that mess is
going.
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.
The daily spread of 20 Indicators (Bulls minus Bears) declined
from -1 to -4 (a positive number is bullish; negatives are bearish); the 10-day
smoothed sum that smooths the daily fluctuations declined from +21 to +13.
(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; 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 remain a Bull. I would add to stock
holdings, except that I am concerned about the Debt Ceiling negotiations. They
haven’t bothered the markets yet. That
may change as the deadline approaches.
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
TUESDAY MARKET INTERNALS (NYSE
DATA)
My basket of Market Internals remained 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.)
“Companies in the US registered a solid upturn in business activity during May, according to the latest ‘flash’ PMI™ data from S&P Global. Overall growth in output was the fastest for just over a year. The expansion was led by service providers, however, as manufacturers recorded only a slight rise in production. The headline S&P Global Flash US PMI Composite Output Index registered 54.5 in May, up from 53.4 in April, to signal a solid and faster expansion in private sector business activity. The rise in output was the sharpest since April 2022, but led by service providers, who reported stronger demand conditions. Although manufacturers registered growth in production, it was only marginal and slowed from the previous survey period.” Report at...
https://www.pmi.spglobal.com/Public/Home/PressRelease/fb16b048c1ca4d659e136ae0c52faaa2
My cmt: What recession? It’s not in this report.
“While everyone knows the debt ceiling will be raised this time as it has all previous times, it is one of the few times where the opposition party has some power. Although these types of negotiations belong in the budget process, the party in power never seems to want the minority to engage at that point because a simple majority wins that vote. It is painful to watch, but it’s still the best system around. Democrats point to three straight, clean debt ceiling increases under Donald Trump. Republicans counter that Joe Biden and Chuck Schumer are both on record as demanding negotiations and compromise when they were Senators from the minority party...worst case, I can see a BREXIT type decline, 4-6% in short, sharp fashion. If that occurs, buy it with both hands.” Commentary at...
https://investfortomorrow.com/blog/still-talking-debt-ceiling-but-pga-was-the-story/
-Tuesday the S&P 500 fell about 1.1% to 4146.
-VIX rose about 8% to 18.53.
-The yield on the 10-year Treasury dipped slightly to 3.701%.
-Drop from Top: 13.6%. 25.4% max (on a closing basis).
-Trading Days since Top: 348-days.
The S&P 500 is 4.3% ABOVE its 200-dMA and 1.5% 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.
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. XLE tested its March low on 16 May on lower volume so I continue to hold it. XLE is up about 4% since then.
XLY - Consumer Discretionary ETF.
Listen to the Pundits on CNBC and you would be sure that high PEs will derail the current rally. PEs are nowhere near extremes we saw in 2000 before the dot.com crash. Now, there are more investors chasing fewer stocks so PEs can go much higher than seems reasonable. I don’t think we are in a bubble yet.
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
