... 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.
 
“The most troubling question raised by the debate was one that was neither asked nor answered: Who’s running the country for the next seven months?”  - Mark Stappenbeck, WSJ letters.
 
“President Biden clearly understands the stakes. But he seems to have lost track of his own role in this national drama. As the situation has become more dire, he has come to regard himself as indispensable...He does not seem to understand that he is now the problem — and that the best hope for Democrats to retain the White House is for him to step aside.” – NY Times Editorial Board.
 
"I admire our President. I voted for him and campaigned for him. He has visited my home and been gracious to my family and our country. But shame on all of you pretending everything is ok. You are leading us – and him – into a disaster, and you damn well know it. Our incumbent president is unelectable and weak...” - Rep. Dean Phillips (D), Minnesota, commenting at his presidential campaign event back in January.
My cmt: I heard an interview with Dean Phillips back when he was running for President.  He sounded like a reasonable and smart fellow. Too bad the Dem’s weren’t willing to see Biden’s failings back then, although Dean was probably too middle-of-the-road. The Dems have gone hard left.
 
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 rose about 1% to 5634, a new, all-time high.
-VIX rose about 3% to 12.85. (The Options Players are nervous.)
-The yield on the 10-year Treasury declined to 4.281% (compared to this time yesterday).
 
MY TRADING POSITIONS:
XLK – Holding since the October 2022 lows.
 
CURRENT SUMMARY OF APPROXIMATELY 50 INDICATORS:
The Bull/Bear Spread (Bull Indicators minus Bear Indicators) reversed again, this time back to a Bullish 10 Bear-signs and 17-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 also reversed up, a bull-sign. (We may want to smooth the purple line by using a longer time-frame. It has been reversing more than I’d like.)
 

The Bull/Bear, 50-Indicator spread improved from -2 to +7 (7 more Bull indicators than Bear).
 
TODAY’S COMMENT:
Indicators for the S&P 500 were close to issuing a top warning today, but instead remained neutral.  Bollinger Bands were overbought, but RSI was not quite there. A couple of other indicators are already issuing top warnings.
 
The Index is trying to break above the upper trend line in the wedge pattern (red, dashed-lines in the above chart).  If that continues the bearish wedge will no longer be an issue.
 
The McClellan Oscillator (a breadth indicator) turned positive today so that cancels the Hindenburg Omen that we saw yesterday.  That didn’t last long.
 
The S&P 500 made another new, all-time high today (Wednesday) while the number of issues making new, 52-week-highs on the NYSE improved and climbed further above my bearish threshold. This is suggesting greater breadth. If a correction were to start now, my guess is that it would be in the 5-7% range. We still have signs warning of a pullback.
 
The S&P 500 is 14.9% above the 200-dMA and that remains stretched. The bear sign is greater than 12%.
 
Statistical analysis of daily moves is indicating that the daily moves have gotten too predictably small, a sign of complacency. This suggests a top within the next 20-days. The last time we saw this indicator was at the 31 July top last year. That was followed by a 10% correction.

Wednesday was a statistically significant up-day. That just means that the price-volume move exceeded my statistical parameters. Statistics show that a statistically-significant, up-day is followed by a down-day about 60% of the time.  Tops almost always occur on Statistically-significant, up-days, but not all statistically-significant, up-days occur at tops. Today could be a short-term top, there were 4 top indicators that were bearish, but not enough to send a strong top-signal.
 
LONG-TERM INDICATOR: The Long Term NTSM indicator remained HOLD: PRICE s bullish; VOLUME, VIX & SENTIMENT are 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
No change: I am Neutral on the market. A pullback is coming, but we don’t yet have a smoking gun to say it’s here. My guess now is that we’ll see a 5-7% correction in late July or early August, but I’ll wait for the indicators. It may change based on what we see. If we expect a small correction I won’t make any portfolio changes; I don’t like to try to time corrections unless I expect a 10% or greater pullback.
 
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
 
WEDNESDAY 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 50% stocks, including stock mutual funds and ETFs. I’m usually about 50% invested in stocks, so this is normal 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.