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“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
PAYROLL REPORT / AVG HOURLY EARNINGS / UNEMPLOYMENT RATE (CNBC)
“...payrolls grew even faster than expected and the unemployment rate fell despite signs of a weakening economy.
Nonfarm payrolls rose by a seasonally adjusted 199,000 for the month... The unemployment rate declined to 3.7%..Average hourly earnings, a key inflation indicator, increased by 0.4% for the month and 4% from a year ago.” Story at...
https://www.cnbc.com/2023/12/08/jobs-report-november-2023-us-payrolls-rose-199000-in-november-unemployment-rate-falls-to-3point7percent.html
 
UNIVERSITY OF MICHIGAN SENTIMENT (Investopedia)
“The Michigan Consumer Sentiment index jumped 13% in December from November’s reading to move to 69.4 from 61.3, erasing four months of decline.  Consumer expectations for inflation in the year ahead fell to 3.1...The Michigan Consumer Sentiment Index hit 69.4 in the preliminary reading for December, moving up 13% from November’s final reading of 61.3.” Story at...
https://www.investopedia.com/consumer-sentiment-up-13-erasing-four-month-decline-8413441
 
MARKET REPORT / ANALYSIS
-Friday the S&P 500 rose about 0.4% to 4604. (This is a new 52-week high, but not an all-time high.)
-VIX dipped about 5% to 12.4.
-The yield on the 10-year Treasury rose to 4.231%.
 
PULLBACK DATA:
-Drop from Top: 4%. 25.4% max (on a closing basis).
-Trading Days since All-Time Top: 486-days. (The top was 3 January 2022.)
The S&P 500 is 7.1% ABOVE its 200-dMA and 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 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.)
 
I took profits and then reestablished positions as follows:
SSO – 2x S&P 500 ETF. Added 8/24.
QLD – Added 8/30.
 
INTC – Added 12/6/2023.
BA – Added 12/6/2023. Boeing has been doing well recently.  They have the orders for new planes – can they execute? I’m guessing yes, since the market seems to think they will.
 
SPY – SOLD in retirement plan.
DWCPF - Dow Jones U.S. Completion Total Stock Market Index. – Added 12/7/2023.
 
TODAY’S COMMENT:

This is a chart I look at during rough patches in the market. It points out a seemingly obvious observation that bottoms are made with high, new-lows and rallies start with increasing new-highs.   
 
After a bottom, small caps usually outperform.  That didn’t happen this time (going all the way back to October 2022) because interest rates were rising and small caps can be more interest rate sensitive. Now that interest rates have stopped rising, small caps should outperform, as they have recently. That’s why I made a big bet on small caps in my retirement account when I sold the S&P 500 and bought the Dow Jones U.S. Completion Total Stock Market Index – the market minus the S&P 500.
 
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 6-bear and 17-bull.
 
BULL SIGNS
-The smoothed advancing volume on the NYSE is rising.
-The 10-dMA percentage of issues advancing on the NYSE (Breadth) is above 50%.
-The 50-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.
-Long-term new-high/new-low data.
-Slope of the 40-dMA of New-highs is rising.
-McClellan Oscillator.
-On average, the size of up-moves has been larger than the size of down-moves over the last month.
-VIX indicator.
-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.
-XLI-ETF (Cyclical Industrials) vs the S&P 500. The 40-dMA of spread is turning up – call it bullish.
-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.
-59% 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) is turning bullish.
 
NEUTRAL
-There was a Distribution Day 6 December.
-There have been 4 Statistically-Significant days (big moves in price-volume) in the last 15-days.
-Overbought/Oversold Index (Advance/Decline Ratio).
-Sentiment.
-Bollinger Band Squeeze 28 April - expired.
-Bollinger Bands.
-The 50-dMA percentage of issues advancing on the NYSE (Breadth) has not been below 50%, for more than 3 days in a row.
-27 November there was a Bearish Outside Reversal Day, but since the McClellan Oscillator is bullish and low volumes on the prior day may have screwed this indicator, I’ll call this one neutral.
-There have been 13 up-days over the last 20 sessions.
-There have been 5 up-days over the last 10 sessions.
-There was a New-high/New-low spread reversal on 4 October (based on std deviation of spread). - Expired
-The S&P 500 is 7.1% 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.
-RSI.
-There were Hindenburg Omen signals 11 & 12 Sept 2023 – expired. The McClellan Oscillator turned positive.
-The Calm-before-the-Storm/Panic Indicator flashed a top warning signal 15 Sept., but it may well have been a bottom signal. - Expired
-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.
-The Smart Money (late-day action).
 
BEAR SIGNS
-The 100-dMA percentage of issues advancing on the NYSE (Breadth) is below 50%
-Issues advancing on the NYSE (Breadth) compared to the S&P 500.
-MACD of S&P 500 price made a bearish crossover 6 Dec.
-My Money Trend indicator is falling.
-Short-term new-high/new-low data.
-The graph of the 100-day Count (the 100-day sum of up-days).
 
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 6 bear-signs and 17-Bull. Last week, there were 5 bear-sign and 20 bull-signs.
 
Indicators are trending down slightly, but that seems normal given that the markets have been working off overbought conditions.
 
The daily spread of 20 Indicators (Bulls minus Bears) improved from +3 to +4 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations declined +41 to +37. (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 improved to BUY: PRICE & VIX are bullish; VOLUME & 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.