Heat Waves are Normal ... Jobless Claims ... GDP ... Durable Orders ... Momentum Trading DOW Stocks & ETFs … Stock Market Analysis ...

 
“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
“When you want to help people, you tell them the truth. When you want to help yourself, you tell them what they want to hear.” - Thomas Sowell, , senior fellow at the Hoover Institution.
 
JOBLESS CLAIMS (AP News)
“The number of Americans applying for jobless benefits slid last week to its lowest level in five months, further evidence that the U.S. labor market continues to defy the Federal Reserve’s attempts to cool it off. U.S. applications for unemployment benefits fell by 7,000 to 221,000 for the week ending July 22...” Story at...
https://apnews.com/article/unemployment-benefits-jobless-claims-layoffs-labor-af1be1f6f26974ffc59fa44495158cc4
 
GDP – ADV (YahooFinance)
“The US economy grew at a faster-than-expected pace in the second quarter of 2023, adding to signs that the threat of a recession has faded in the immediate term. The Bureau of Economic Analysis's advance estimate of second quarter US gross domestic product (GDP) showed the economy grew at an annualized pace of 2.4% during the period...” Story at...
https://finance.yahoo.com/news/gdp-us-economy-grows-at-a-faster-pace-than-expected-in-q2-124533676.html
 
DURABLE ORDERS (Morningstar)
“Orders for longer-lasting goods jumped more than expected, increasing for the fourth straight month.
New orders for products meant to last at least three years, including appliances, computers, cars and other manufactured goods, increased 4.7% in June from a month earlier...” Story at... 
https://www.morningstar.com/news/dow-jones/2023072710413/us-durable-goods-orders-jump-for-fourth-straight-month
 
HEAT WAVES ARE NORMAL (msn.com)
“Government researchers have been tracking heat waves for more than 100 years. According to data from the U.S. Climate Change Science Program, which is made available by the Environmental Protection Agency, the annual heat wave index for the contiguous 48 states was substantially higher in the 1930s than at any point in recent years. In some years in the 1930s, it was four times greater or even more... Although it’s true that some parts of the United States have seen the number of hotter-than-usual days increase over the past 70 years — including in California and the New York metropolitan area, both of which happen to be areas where a large number of media outlets are located — most weather stations have shown no meaningful changes or even declines... If the available data so clearly reveal that there is no heat-wave crisis, why are media outlets suggesting the opposite is true? The answer is sloppy, irresponsible media reporting, combined with cherry-picked data.” Story at...
It’s not climate change that’s causing heat waves this summer but no one wants to explain why (msn.com)
My cmt: The above article isn’t climate denial – the earth has warmed about 1 degree centigrade over the last 100-years due to human influences, primarily CO2 released into the atmosphere. Within that slow warming are higher magnitude heat waves. The highest recorded temperature in the US was just set in the last couple of years.  That record stood for about 100 years, going back to the 30’s. If the record temperature was due only to Global Warming, that record should have been broken years ago.
 
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 was down about 0.6% to 4537.
-VIX jumped about 9% to 14.41.
-The yield on the 10-year Treasury was 3.994%.
 
PULLBACK DATA:
-Drop from Top: 5.4%. 25.4% max (on a closing basis).
-Trading Days since Top: 392-days.
The S&P 500 is 11.5% ABOVE its 200-dMA and 4% 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 –SOLD.
 
XLK – Technology ETF.
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.
 
SHY – Short term bonds.
 
TODAY’S COMMENT:

That’s a Nasty looking chart and here was more bad news.
 
Today, Thursday, was a Bearish Outside Reversal Day. “To constitute an Outside Reversal, the high of the current day must exceed the previous day's high, and the low of the current day must be lower than the previous day's low. This indicates a larger trading range and is a sign of increased volatility... For a bearish Outside Reversal, the opening price should be higher than the previous day's high... for a bullish Outside Reversal, the closing price should be higher than the previous day's high, suggesting that the buyers have gained the upper hand... These price fluctuations represent a struggle between buyers and sellers, and the eventual closing price indicates which group has gained control, signaling the future price direction.” From...
https://www.financestrategists.com/wealth-management/fundamental-vs-technical-analysis/outside-reversal/#what-is-an-outside-reversal
 
MACD of Price turned also bearish.  There were other bearish signs too, we may see them on tomorrow’s Friday summary of indicators.
 
On the bullish side, today, Thursday, 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. That may not hold Friday, though.  Thursday’s move was relatively small, less than 1%, so we may not see an up-day Friday.  Even if Friday is up, a return down is likely since I am suspicious that the trend has been broken and markets are heading down.
 
The daily spread of 20 Indicators (Bulls minus Bears) slipped from -5 to -7 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations dropped from +29 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 slipped to HOLD: PRICE is positive; VOLUME, VIX & SENTIMENT are neutral. (This indicator ensemble is showing positive market conditions, but I expect a better buying point ahead.)
 
(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 21 December, 9 sessions before the high of this recent bear market, based on the bearish “Friday Rundown” of indicators.)
 
Bottom line: I remain a cautious Bull, expecting a decline of around 5% on the S&P 500 to start soon. (The Broken Record continues!)
 
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
 
THURSDAY MARKET INTERNALS (NYSE DATA)

My basket of Market Internals remained HOLD. (My basket of Market Internals is 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 50% 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 as I did back in October.