Momentum Trading DOW Stocks & ETFs … Stock Market Analysis ...

 

“Cancel culture, woke history, and pro-Hamas protests blaming Israel for the October 7th massacre make one wonder, what are they teaching our future generations of Americans?”  - Michael Ramirez. Commentary at...
https://michaelramirez.substack.com/p/michael-ramirez-essay-fall-of-rome?r=ntzh3&utm_campaign=post&utm_medium=web
 
“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 rose about 0.3% to 4378.
-VIX fell about 0.5% to 14.81.
-The yield on the 10-year Treasury rose to 4.569%.
 
PULLBACK DATA:
-Drop from Top: 8.7%. 25.4% max (on a closing basis).
-Trading Days since Top: 464-days.
The S&P 500 is 3% ABOVE its 200-dMA and 0.8% 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.
 
TODAY’S COMMENT:
The S&P 500 has now made 7 consecutive up-days. Surely, we’ll see a down day...some day?  Markets don’t go up for ever and when I look at sentiment, it is bullish because a lot of investors are betting against this rally and are bearish. I don’t get that. Markets are coming off the bottom of a 10% correction that started in late July 2023 and finished on Friday 27 October. Further, markets bottomed in October of 2022 after a bear market decline of 25%. Sicne then, the trend has been up and the feared recession hasn’t materialized - the least line of resistance is up.
 
Breadth is still not great: both the 50-dMA and the 100-dMA of the % of issues advancing on the NYSE are below 50%. In other words, over those 50 and 100-day time frames, less than half of issues on the NYSE have gone up. It has improved, but not enough to give the all-clear.
 
Still, in the end, price counts the most and the S&P 500 has been going up-up-up.
 
The daily spread of 20 Indicators (Bulls minus Bears) declined from +13 to +8 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations improved from -19 to zero. (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 & SENTIMENT are bullish; VIX is 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
Short-term correction over – I’m bullish. The markets are going higher. Can we make new all-time highs and end the Bear Market that is still hanging around since October of 2021? I think so, and it looks like a lot of investors agree, but we’ll see.
 
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 BUY. (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.