Housing Starts ... Permits ... Momentum Trading DOW Stocks & ETFs … Stock Market Analysis ...

 
“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
“...the number of 52-week highs on the NYSE...has been jumping up which is a good sign for the rally. So when the media or your friends talk about the Super 7 or Elite 8 stocks being the only ones that are rallying, this along with the volume thrusts tell us that’s not the case. The rally is very broad-based and powerful and getting stronger, right on schedule. And as I often say, the most powerful rallies rarely give investors on the sidelines an opportunity to get in. They sit and wait and hope for a deeper pullback that just doesn’t come.” – Paul Schatz, President Heritage Capital. Commentary at...
https://investfortomorrow.com/blog/wowza/
 
HOUSING STARTS / PERMITS (Yahoo Finance)
“New residential construction, including single-family and multifamily homes, increased 1.9% in October from the month before to 1.372 million units on a seasonally adjusted basis... Authorized residential permits — a gauge of future activity — gained 1.1%...” Story at...
https://finance.yahoo.com/news/housing-starts-and-permits-increase-in-october-but-more-activity-is-needed-142946572.html
 
MARKET REPORT / ANALYSIS
-Friday the S&P 500 rose about 0.1% to 4514.
-VIX dipped about 4% to 13.80.
-The yield on the 10-year Treasury dipped to 4.437%.
 
PULLBACK DATA:
-Drop from Top: 5.9%. 25.4% max (on a closing basis).
-Trading Days since All-Time Top: 472-days. (The top was 3 January 2022.)
The S&P 500 is 5.8% ABOVE its 200-dMA and 4.1% ABOVE its 50-dMA.
*I won’t call the correction over until the S&P 500 makes a new-high; however, evidence suggests the major bear-market bottom (25% decline) was in the 3600 area and we called a buy on 4 October 2022.
 
MY TRADING POSITIONS:
XLK – Technology ETF (holding since the October 2022 lows).
XLY - Consumer Discretionary ETF. (Holding since the October 2022 lows - I bought more XLY Monday, 8/21.)
 
I took profits and then reestablished positions as follows:
SPY – I bought a large position in the S&P 500 Friday, 8/14, in my 401k (it has limited choices).
XLE – Added Tuesday, 8/22.
SSO – 2x S&P 500 ETF. Added 8/24.
 
CSCO – added 9/5. SOLD 11/16/2023. I took a bath on that one.  (This was a Ken Seymore pick on Fast Money. I should have followed my momentum rules and sold weeks ago.)
MSFT – added 11/16/2023. MSFT was down today in part because Open AI fired its CEO.  Microsoft onws 50% of Open AI.
 
TODAY’S COMMENT:
We look at a summary of indicators on Friday. (These indicators tend to be both long-term and short-term, so they are different than the 20 that I report on daily.) The weekly rundown of indicators remained bullish this week: now 7-bear and 17-bull.
 
BULL SIGNS
-There was a Follow-thru Day 14 November. This cancels all Distribution Days/
-The 10-dMA percentage of issues advancing on the NYSE (Breadth) is above 50%.
-MACD of the percentage of issues advancing on the NYSE (breadth) made a bullish crossover 12 October.
-Smoothed Buying Pressure minus Selling Pressure.
-MACD of S&P 500 price made a bullish crossover 2 Nov.
-Long-term new-high/new-low data.
-Slope of the 40-dMA of New-highs is rising.
-McClellan Oscillator.
-The graph of the 100-day Count (the 100-day sum of up-days).
-The Smart Money (late-day action).
-On average, the size of up-moves has been larger than the size of down-moves over the last month.
-There was a high up-volume day on 14 November. In addition, there were back-to-back, high up-volume days (80%+) on the NYSE 2 & 3 Nov.
-The 5-day EMA is above the 10-day EMA, so short-term momentum is bullish.
-The 5-10-20 Timer System is BUY.
-There was a Zweig Breadth Thrust 3 November. That’s a rare, very-bullish sign, that will remain bullish until the McClellan Oscillator turns negative.
-57% of the 15-ETFs that I track have been up over the last 10-days. (45-55% is neutral.)
-S&P 500 spread vs. Utilities (XLU-ETF).
 
NEUTRAL
-There have been 4 Statistically-Significant days (big moves in price-volume) in the last 15-days. Coming off the bottom, this reinforces bullishness.
-Sentiment.
-Bollinger Band Squeeze 28 April - expired.
-Bollinger Bands.
-Overbought/Oversold Index (Advance/Decline Ratio).
-The 50-dMA percentage of issues advancing on the NYSE (Breadth) has not been below 50%, for more than 3 days in a row.
-Issues advancing on the NYSE (Breadth) compared to the S&P 500.
-9 November there was a Bearish Outside Reversal Day, but since the McClellan Oscillator is bullish, I’ll call this one neutral.
-There was a New-high/New-low spread reversal on 4 October (based on std deviation of spread). - Expired
-The S&P 500 is 5.8% above its 200-dMA. (Bear indicator is 12% above the 200-day.)
-The short-term, 10-day EMA, Fosback Hi-Low Logic Index.
-The long-term, 50-dEMA, Fosback Hi-Low Logic Index.
-There were Hindenburg Omen signals 11 & 12 Sept 2023 – expired. The McClellan Oscillator turned positive.
-There have been 14 up-days over the last 20 sessions.
-There have been 8 up-days over the last 10 sessions.
-The Calm-before-the-Storm/Panic Indicator flashed a top warning signal 15 Sept., but it may well have been a bottom signal. - Expired
-VIX indicator.
-2.8% of all issues traded on the NYSE made new, 52-week highs when the S&P 500 made a new all-time-high, 3 January 2022. (There is no bullish signal for this indicator.) This indicated that the advance was too narrow and a correction was likely to be >10%. It proved correct, but is now Expired.
 
BEAR SIGNS
-The smoothed advancing volume on the NYSE is falling.
-The 50-dMA percentage of issues advancing on the NYSE (Breadth) is below 50%
-The 100-dMA percentage of issues advancing on the NYSE (Breadth) is below 50%
-My Money Trend indicator is falling.
-Short-term new-high/new-low data.
-RSI.
-XLI-ETF (Cyclical Industrials) vs the S&P 500.
 
On Monday’s update of the Friday summary of indicators (20 December 2021), 9 days before the top of the current 25% correction, there were 21 bear-signs and zero bull-signs. Now there are 7 bear-signs and 17-Bull. Last week, there were 6 bear-sign and 18 bull-signs.
 
The daily spread of 20 Indicators (Bulls minus Bears) declined from +8 to -2 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations declined from +83 to +70. (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 BUY: PRICE, & VOLUME are bullish; VIX & SENTIMENT are neutral.
 
(The important major BUY in this indicator was on 21 October 2022, 7-days after the bear-market 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 bullish.
 
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
 
FRIDAY 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 75% stocks, including stock mutual funds and ETFs. I’m usually about 50% invested in stocks. I’m “over invested” now expecting new, all-time highs this year. That burns all the cash.  I have about 25% of the portfolio in bonds.
 
I trade about 15-20% of the total portfolio using the momentum-based analysis I provide here. When I see a definitive bottom, I add a lot more stocks to the portfolio using an S&P 500 ETF as I did back in October.