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

 
“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
“Far more money has been lost by investors in preparing for corrections, or anticipating corrections, than has been lost in the corrections themselves.” - Peter Lynch, former manager of Fidelity’s Magellan® fund.
 
CLIMATE CRISIS FADING (WSJ)
“...U.S. and European governments are trying to induce an energy transition by building or expanding organizations and programs favoring particular “clean” technologies, including wind and solar generation, carbon capture, hydrogen production and vehicle electrification. Promoting technological innovation is a worthy endeavor, but such efforts face serious challenges as costs and disruptions grow without tangible progress in reducing local, let alone global, emissions. Retreats from aggressive goals are already under way in Europe, with clear signs of mandate fatigue. The climbdown will be slower in the U.S., where subsidies create constituencies that make it more difficult to reverse course.
We should welcome, not bemoan, the energy transition’s passage through the issue-attention cycle. It means that today’s ineffective, inefficient, and ill-considered climate-mitigation strategies will be abandoned, making room for a more thoughtful and informed approach to responsibly providing for the world’s energy needs.” – Steven E. Koonin,senior fellow at Stanford’s Hoover Institution and author of “Unsettled: What Climate Science Tells Us, What It Doesn’t, and Why It Matters.” Full opinion at...
https://www.wsj.com/articles/the-climate-crisis-fades-out-5944bd44?mod=opinion_trendingnow_article_pos3
 
“BREAKING: Gaza’s Health Ministry says 274 Palestinians were killed during the Israeli operation,” reports the Associated Press, only 48 hours after it had exposed how the Hamas ministry’s daily death tolls are “at odds with underlying data.” When will the media stop taking the kidnappers at their word?...
... Hamas started the war with a massacre, took these hostages and hid them in a crowded civilian area. Then, when Israel came to free them, Hamas responded with heavy fire, including RPGs—yet people are condemning Israel. It makes us wonder if the West has lost the moral discernment and instinct for self-preservation needed to defend itself in a world of killers. Hamas could not survive if not for its enablers around the world.” Excerpt from WSJ Opinion pages at...
https://www.wsj.com/articles/blaming-israel-for-rescuing-its-people-hamas-gaza-war-17581387?mod=opinion_trendingnow_article_pos1
 
MICHIGAN SENTIMENT (Univ Michigan)
“Consumer sentiment was little changed in June; this month’s reading was a statistically insignificant 3.5 index points below May and within the margin of error. Sentiment is currently about 31% above the trough seen in June 2022 amid the escalation in inflation. Assessments of personal finances dipped, due to modestly rising concerns over high prices as well as weakening incomes. Overall, consumers perceive few changes in the economy from May.” Press release at...
http://www.sca.isr.umich.edu/
My cmt: Weird that almost every news outlet reported that sentiment fell, even though the Michigan press release noted the decline was “within the margin of error.” Proper reporting would have stated there was no change from last month.
 
MARKET REPORT / ANALYSIS
-Friday the S&P 500 was little changed at 5432.
-VIX rose about 6% to 12.66.
-The yield on the 10-year Treasury declined to 4.221%.
 
MY TRADING POSITIONS:
UWM – Added 5/2/2024
QLD – Added 4/29/2024
XLK – Holding since the October 2022 lows.
 
DWCPF - Dow Jones U.S. Completion Total Stock Market Index. – Added 12/7/2023 when I sold the S&P 500.
“The Dow Jones U.S. Completion Total Stock Market Index, also known as the DWCPF, is a widely used financial index that provides a comprehensive measure of the US equity market. The DWCPF includes all US stocks that are not included in the Dow Jones US Total Stock Market Index, which comprises large-cap and mid-cap companies. As a result, the DWCPF provides a complete picture of the US stock market, including small-cap and micro-cap companies, which are often overlooked by other indexes.” From...
https://fi.money/blog/posts/what-is-dow-jones-u-s-completion-total-stock-market-index-dwcpf
 
CURRENT SUMMARY OF APPROXIMATELY 50 INDICATORS:
The Bull/Bear Spread (Bull Indicators minus Bear Indicators) was 11 Bear-signs and 14-Bull. (The rest are neutral. It is normal to have a lot of neutral indicators since many of those are top or bottom indicators that will signal only at extremes.) The 10-dMA of spread (purple line in the chart below) is moving higher, a bullish sign.

TODAY’S COMMENT:
Thursday there was another Hindenburg Omen and as the S&P 500 squeaked out another new-high, only a small number of issues on the NYSE made new, 52-week highs. The 10-dMA of issues advancing on the NYSE also fell below 50%, reminding us that less than half of the issues on the NYSE have been going up over the last 2-weeks.  These are signs that the advance is narrow.
 
When the Index jumped higher after the CPI news was good, I had hoped that markets would begin to broaden out – that has not been the case.
 
The S&P 500 remains 12.5% above the 200-dMA. The bear sign is greater than 12% so this can be a drag on markets.  The Index can get a lot higher than 12% above the 200-day; it was 20% above its 200-day back in October of 2009. Then, the S&P 500 managed to climb another 4% before there was about a 10% retreat, but that was a rare event. Usually, 12% is a reasonable limit. From here, the best case would be a slowing of the advance so the 200-dMA can catch up.
 
The Bull/Bear indicator spread is +3 (3 more Bull indicators than Bear indicators). We’d like to see it higher, but it is not bearish enough for me to cut stock holdings.
 
LONG-TERM INDICATOR: The Long Term NTSM indicator remained BUY: PRICE, VOLUME & VIX are bullish; SENTIMENT is neutral.
(The Long-Term Indicator is not a good top-indicator. It can signal BUY at a top.)
 
(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 am bullish, but cautiously so, since markets are stretched and breadth is once again looking weak.
 
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)
 

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 SELL. (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 65% stocks, including stock mutual funds and ETFs. I’m usually about 50% invested in stocks, so this is a bullish, over-invested position. 75% is my max stock allocation so I have some cash now.
 
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, usually by using an S&P 500 ETF as I did back in October 2022 and 2023.