ISM Manufacturing ... Jobless Claims ... Construction Spending ... 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.
 
POLAR BEARS, DEAD CORAL & OTHER CLIMATE FICTIONS (Excerpt from WSJ)
“Over the past 20 years, climate activists have elevated various stories of climate catastrophe, then quietly dropped them without apology when the opposing evidence becomes overwhelming. The only constant is the scare tactics... After years of misrepresentation, it finally became impossible to ignore the mountain of evidence showing that the global polar-bear population has... risen from around 12,000 in the 1960s to about 26,000...
...The same thing has happened with activists’ outcry about Australia’s Great Barrier Reef... For the past three years the Great Barrier Reef has had more coral cover than at any point since records began in 1986, with 2024 setting a new record...
...Today, killer heat waves are the new climate horror story. In July President Biden claimed “extreme heat is the No. 1 weather-related killer in the United States.” He is wrong by a factor of 25. While extreme heat kills nearly 6,000 Americans each year, cold kills 152,000...
...The costs of all the extreme policies campaigners push for are much worse. All told, politicians across the world are now spending more than $2 trillion annually—far more than the estimated cost from climate change that these policies prevent each year...
... Telling half-truths while piously pretending to “follow the science” benefits activists with their fundraising, generates clicks for media outlets, and helps climate-concerned politicians rally their bases. But it leaves all of us poorly informed and worse off.” - Bjorn Lomborg, President of the Copenhagen Consensus, visiting fellow at Stanford University’s Hoover Institution. Opinion at...
https://www.wsj.com/articles/polar-bears-dead-coral-and-other-climate-fictions-528b18ea
My cmt: Climate change is real.  The earth’s temperature has risen about 1 degree centigrade over the last 100-years, but as Bjorn Lomborg points out, “the net result is nowhere near catastrophic.”
 
JOBLESS CLAIMS (ABC News)
“The number of Americans filing for unemployment benefits jumped to its highest level in a year last week, even as the labor market remains surprisingly healthy in an era of high interest rates. Jobless claims for the week ending July 27 climbed by 14,000 to 249,000, from 235,000 the previous week...” Story at...
https://abcnews.go.com/Business/wireStory/number-americans-filing-jobless-claims-hits-highest-level-112472385
 
ISM MANUFACTURING PMI (ISM via prnewswire)
"Economic activity in the manufacturing sector contracted in July for the fourth consecutive month and the 20th time in the last 21 months...The Manufacturing PMI® registered 46.8 percent in July, down 1.7 percentage points from the 48.5 percent recorded in June. The overall economy continued in expansion for the 51st month after one month of contraction in April 2020. (A Manufacturing PMI® above 42.5 percent, over a period of time, generally indicates an expansion of the overall economy.)” Press release at...
https://www.prnewswire.com/news-releases/manufacturing-pmi-at-46-8-july-2024-manufacturing-ism-report-on-business-302211321.html
 
CONSTRUCTION SPENDING (Assoc. Builders & Contractors)
“National nonresidential construction spending declined 0.2% in June, according to an Associated Builders and Contractors analysis of data published today by the U.S. Census Bureau. On a seasonally adjusted annualized basis, nonresidential spending totaled $1.21 trillion. Nonresidential construction has expanded 5.3% from a year ago.” Story at...
https://www.abc.org/News-Media/News-Releases/abc-nonresidential-construction-spending-decreased-in-june
 
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 fell about 1.4% to 5447.
-VIX rose about 14% to 16.36. 
-The yield on the 10-year Treasury declined to 3.956% (compared to this time, prior trading day). The good news of falling rates is offset by the worry that rates are falling due to fears the economy is slipping.
 
MY TRADING POSITIONS:
XLK – Holding since the October 2022 lows.
XLK – added more 7/26. This reestablishes the position I had before this recent weakness.
UWM – added 7/15.
QLD – added 7/24.
DWCPF - Dow Jones U.S. Completion Total Stock Market (TSM) Index, a broad market index made up of stocks of U.S. companies not included in the S&P 500 Index. – Added 7/29/2024
 
CURRENT SUMMARY OF APPROXIMATELY 50 INDICATORS:
The Bull/Bear Spread count slipped to 14 Bear-signs and 8-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 Bull/Bear, 50-Indicator spread (Bull Indicators minus Bear Indicators) dropped from -4 to -6 (6 more Bear indicators than Bull indicators).
 
TODAY’S COMMENT:
ISM Manufacturing and today’s employment numbers were worrisome. “The Fed should have moved already” said Jeffery Gundlach on CNBC Wednesday. 
 
I don’t try to analyze the economy.  I prefer to follow the markets via market indicators. They are still leaning to the Bear side and have not yet given a buy-signal. I increased my stock holding by a lot recently because the S&P 500 held at its 50-dMA (more or less) and its lower trend line. That may have been a mistake. The S&P 500 slipped about 0.4% below its 50-dMA Thursday, so we need to see improvement Friday.
 
As noted yesterday, I have been using the 10-dMA of the 50-indicator spread (purple line in the chart above) as a buy-signal. When the 10-dMA is moving higher, it is time to buy. It is still falling, so no buy-signal yet.
 
As I write this (9:30pm Thursday) S&P 500 futures are down (-0.4%) and both Asia and Europe were down from 1 to 5%.  That’s scary and raises a concern that this might be the start of a bigger pullback. That’s always possible, but Breadth still looks good so if more weakness is coming, I suspect that it will not be a big decline. One indicator is signaling an up-day tomorrow.
 
Today’s down day was not unexpected from a technical view since Wednesday was a very big, up-day that qualified as statistically significant in my system. Today, Thursday, was another statistically significant day, this time a down-day. That just means that the price-volume move exceeded my statistical parameters. Statistics show that a statistically-significant, down-day is followed by an up-day about 60% of the time. So let’s hope tomorrow follows the odds and markets bounce higher.
 
In addition, there was buying late in the day Thursday and that is likely to carry over into Friday. We’ll see.
 
LONG-TERM INDICATOR: The Long Term NTSM indicator remained HOLD: VIX is bearish; PRICE, VOLUME & 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 “Summary of 50” indicator.
 
BOTTOM LINE
I’m still waiting to get a buy signal to add more stocks to the portfolio, (although I am close to extreme bullish in my portfolio).
 
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
 
THURSDAY 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 70% stocks, including stock mutual funds and ETFs. I’m usually about 50% invested in stocks when markets are stretched; my current stock position is slightly above the norm. (75% is my max stock allocation when I am strongly bullish.)
 
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.