Jobless Claims ... National Activity Index ... Existing Home Sales ... 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.
 
COOLING OCEAN TEMPERATURES BAFFLING (BGR)
“The Atlantic Ocean is cooling at an exponential rate, and nobody is sure why. It's been more than a year of record-high global sea temperatures, including being close to the collapse of the AMOC. Despite those troubles, though, the Atlantic is now experiencing something quite baffling-temperatures are cooling, and scientists are scrambling to figure out what's going on.” Story at...
No one can figure out why the Atlantic Ocean is cooling at record speed (msn.com)
My cmt: This just goes to show that the reports of the coming demise of the AMOC (Atlantic Meridional Overturning Circulation) were just more scare tactics from the global-warming, let’s-panic-the-public, media. The Atlantic Ocean warms and cools on a multi-decadal oscillation, known as the AMO. The AMO is one of the key drivers of hurricane formation along with weather patterns in the African Sahel and El Nino/La Nina cycles. It would be good if the AMO is switching from its current warm-cycle to a cool-cycle since it would suggest fewer large hurricanes as shown in the chart below.
 
“The AMOC is a complicated trans-hemispheric circulation driven by temperature and salinity imbalances (both influence water density). The Gulf Stream, which brings bathwater-like temperatures as far north as Cape Cod and helps moderate the climate of the UK, is part of the AMOC.

Figure 1. Plot of decadal average Atlantic Multidecadal Oscillation (AMO) Index for hurricane months (Jun-Dec) and decadal number of U.S. landfalling hurricanes with Saffir-Simpson Category 3 or higher at landfall. Data for AMO is from the National Centers for Environmental Information Climate Prediction Center and data for hurricane landfalls is from the National Hurricane Center. Horizontal axis shows 1900-2010 activity. (Source: AIR)
 
JOBLESS CLAIMS (AP News)
“Slightly more Americans filed for unemployment benefits last week, but the number of claims remains at healthy levels. Jobless claims rose by 4,000 to 232,000 for the week of Aug. 17, the Labor Department reported Thursday... The unemployment rate rose for the fourth straight month in July, though it remains low at 4.3%.” Story at...
https://apnews.com/article/unemployment-benefits-jobless-claims-layoffs-labor-71ffb00a1f90b155d7beebbd65f2f53f
My cmt: They used to teach in MBA programs that 4% was the lowest possible unemployment rate.
 
NATIONAL ACTIVITY INDEX (Chicago FED)
“The Chicago Fed National Activity Index (CFNAI) decreased to –0.34 in July from –0.09 in June. [A zero value for the CFNAI has been associated with the national economy expanding at its historical trend (average) rate of growth; negative values with below-average growth] Two of the four broad categories of indicators used to construct the index decreased from June, and three categories made negative contributions in July. The index's three-month moving average, CFNAI-MA3, was unchanged at –0.06 in July...” Report at...
https://www.chicagofed.org/research/data/cfnai/current-data
 
EXISTING HOME SALES (CNBC)
“Closed sales of previously owned homes rose 1.3% in July compared with June to a seasonally adjusted, annualized rate of 3.95 million units, according to the National Association of Realtors. That was the first gain in five months.
Sales were 2.5% lower compared with the same time last year.” Story at...
https://www.cnbc.com/2024/08/22/july-home-sales-break-4-month-losing-streak-as-supply-rises-nearly-20percent.html
 
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 declined about 0.9% to 5571.
-VIX rose about 8% to 17.55. 
-The yield on the 10-year Treasury rose to 3.848% (compared to this time, prior trading day).
 
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.
 
CURRENT SUMMARY OF APPROXIMATELY 50 INDICATORS:
The Bull/Bear Spread remained well to the bull side at 5 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 Bull/Bear, 50-Indicator spread (Bull Indicators minus Bear Indicators) declined from +16 to +12 (12 more Bull indicators than Bear indicators). The 10-dMA is rising, a bullish sign.
 
TODAY’S COMMENT:
Thursday there was a Bearish Outside Reversal Day.
“Outside reversal is a price chart pattern in investing that occurs when an asset’s high and low prices for the day exceed the high and low prices of the previous day. It is also known as a bullish or bearish engulfing pattern. It can indicate a change in market trend and provide a trading signal to investors.” From...
https://due.com/terms/outside-reversal/
While this is a concern, I need to point out that this signal is often wrong, so I won’t get too concerned. Bullish Outside Reversals are more often correct.
 
Fed Chair Powell’s Jackson Hole speech is set for 10 am Friday. He will probably suggest that conditions are now skewed for a rate cut, but a final decision would depend on data between now and the next Fed meeting. If he is more bullish, or more bearish, markets will move.  
 
LONG-TERM INDICATOR: The Long Term NTSM indicator remained HOLD: VOLUME is bullish; SENTIMENT & PRICE are neutral; VIX, is bearish. (This indicator is more valuable for Sell-signals and during major Bear Markets.)
 
{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 2022 (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 the 2022 bear market, based on the bearish “Summary of 50” indicator.}
 
BOTTOM LINE
I’m bullish. Tomorrow, it’s all about the Fed Chairman’s Jackson Hole speech. Stay tuned.
 
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. Utilities are leading momentum due to the flight-to-safety trade from the recent pullback.  I think Technology (XLK) is probably a better choice.
 
*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 75% stocks, including stock mutual funds and ETFs. I’m usually about 50% invested in stocks when markets are stretched; my current stock position is 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.