FED Rate Decision ... PPI / Core PPI ... Crude Inventories ... Momentum Trading DOW Stocks & ETFs … Stock Market Analysis ...

 
“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
FOMC RATE DECISION (CNBC)
“The Dow Jones industrial Average jumped more than 400 points to a new record Wednesday as the Federal Reserve signaled it would cut rates several times next year, satisfying investors who hoped the central bank would finally start to acknowledge the slowing trend of inflation with a less-aggressive monetary stance... The central bank held the benchmark overnight borrowing rate steady in the 5.25% to 5.5% range as expected, but more importantly it forecast three rate cuts in 2024, which was more than it had previously indicated. Investors have been increasingly hoping for the Fed to give a clearer signal that it would.” Story at...
https://www.cnbc.com/2023/12/12/stock-market-today-live-updates.html
 
PPI / CORE PPI (CNN)
“Tumbling energy prices helped to bring US wholesale inflation down below pre-pandemic levels and to its second-lowest rate this year. The Producer Price Index, which measures the average price changes that businesses pay to suppliers, rose at a slower pace of 0.9% for the 12 months ended in November... core PPI was flat for the month, bringing the yearly increase to 2%.” Story at...
https://www.cnn.com/2023/12/13/economy/november-ppi-inflation-data/index.html
 
EIA CRUDE INVENTORIES (EIA)
“U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 4.3 million barrels from the previous week. At 440.8 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
 
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 rose about 1.4% to 4707. (Only 1.9% below its all-time high.)
-VIX rose about 1% to 12.19.
-The yield on the 10-year Treasury dipped to 4.024%.
 
PULLBACK DATA:
-Drop from Top: 1.9%. 25.4% max (on a closing basis).
-Trading Days since All-Time Top: 489-days. (The top was 3 January 2022.)
The S&P 500 is 9.2% ABOVE its 200-dMA and 6.7% 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 8/21/23.)
 
I took profits and then reestablished positions as follows:
SSO – 2x S&P 500 ETF. Added 8/24/23.
QLD – Added 8/30/23.
 
INTC – Added 12/6/2023.
BA – Added 12/6/2023.
 
DWCPF - Dow Jones U.S. Completion Total Stock Market Index. – Added 12/7/2023. This is a large position in my retirement account betting on Small Caps.
 
TODAY’S COMMENT:
Today the FED made its rate decision and Chairman gave a press conference afterward. I was busy and didn’t see it, but check out today’s chart for the Russel 2000.  Do you think investors liked the FED speak?
 

The Russell far outpaced the S&P 500 since the small caps are more interest rate sensitive, but the big winners today were the small banks – up almost 6% as a group in the KRE-ETF. Wall Street was in full celebration mode. What are the bears saying on CNBCs “Fast Money” this afternoon? They’re still leaning bearsih. It will be interesting to see other traders tomorrow on the “Half Time Report” tommorrow.
 
90% of the volume was up-volume on the NYSE and the S&P 500 closed near the top of its daily range. That’s a strong bullish sign and reinforces other positive market internals today. “Looking good Billy Ray! Feeling good Lewis!”
 

Bollinger Bands remain overbought on the S&P 500 and RSI is close to overbought.  If this rally continues tomorrow we might get some signals of consolidation. I am not expecting much of a pullback. The S&P 500 just finished a 10% correction and it has almost climbed out of the 25% bear market hole we’ve been in for more than 2 years. But there are more signs of worry...
 
Another bear sign popped up today: based on standard deviation analysis of daily changes, the market’s daily moves have been too consistent.  When this statistical signal warns, the markets usually experience a top within a month. How big the decline may be is not clear at this point – if it happens. I'll be looking for confirmation from other indicators.
 
The daily spread of 20 Indicators (Bulls minus Bears) improved from +10 to +14 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations improved from +42 to +56. (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 & VIX are bullish; SENTIMENT 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
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
 
WEDNESDAY 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.