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.
 
-Neil Gorusch, Supreme Court Justice: "I read the other day that...I agreed with Justice Sotomayor, Justice Kagan, and Justice Jackson something like 45 percent of the time. That’s the court I know."
-Major Garrett, CBS Interviewer: "But there are people who watch this right now and say I thought I understood what Roe v. Wade meant in our country. I thought I understand what affirmative action in college admission meant, and this court told me I didn’t understand what that meant and I wrongly relied on things that I thought were settled. What would you say to those?"
-Gorsuch: I would say those are deeply complex legal questions on which reasonable minds can, of course, and do disagree. And that when it comes to Roe v. Wade, for example, what did the court decide? Decided that we the people should answer that question, not nine people sitting in Washington, D.C."
 
“We, who believe in reproductive freedom, will stop Donald Trump’s extreme abortion bans because we trust women to make decisions about their own bodies and not have their government telling them what to do. If there are those who dare to take the freedom to make such a fundamental decision for an individual, which is about one’s own body, what other freedoms could be on the table for the taking?” – Kamala Harris, VP.
My cmt: The odd thing is that she seems to think that this can be accomplished by a federal law. The Supreme Court ruled that this is not a power granted to the Federal Government under the Constitution. I suspect it will take a Constitutional Amendment to accomplish Kamala’s goal and that is not likely.
 
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 rose about 1% to 5240.
-VIX fell about 28% to 27.71. 
-The yield on the 10-year Treasury rose to 3.900% (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.
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 was 17 Bear-signs and 4-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) remained -13 (13 more Bear indicators than Bull indicators). The concerning issue is that there were only 4 indicators giving Bull signs. The 10-dMA continued to fall.
 
TODAY’S COMMENT:

The late-day selling is not encouraging. It suggests selling may continue into tomorrow. Tomorrow, what we’d like to see, is a lower-low for the S&P 500 on lower volume and improving internals.  That would suggest that the panic is subsiding and would give a real signal that the pullback is over. While we like to see markets go higher, we still don’t have an “all-clear.”
 
As of today the S&P 500 was down 7.5% from its all-time top and only 4.5% above its 200-dMA.  The Index is 3.8% below its 50-dMA.
 
I suggested yesterday that we could be in one of these ‘selling stampedes’ that tend to last 17 – 25 sessions, with only 1.5-to three-day pauses/throwback rallies, before they exhaust themselves on the downside. It’s too soon to tell if it is (we are now at day 15), but as Jeffrey Saut said, “Never on a Friday.” The reference was that once the markets get into one of these weekly downside skeins, they rarely bottom on a Friday. Nope, they typically give participants over the weekend to brood about their losses and then they show up the next Monday in ‘sell mode’ leading to Turning Tuesday.”
 
Was today “Turning Tuesday?” It could have been, but unless we see some very bullish action this week that would trigger buy-signals, or we have a successful retest of the prior low, we won’t know.
 
LONG-TERM INDICATOR: The Long Term NTSM indicator remained SELL: VOLUME & VIX are bearish; SENTIMENT & & PRICE 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
We got the bounce. Now we’ll have to wait for more signals to see if we can call an end to the pullback.
I am holding my trading positions, because I feel that it is too late to sell.
 
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
 
TUESDAY 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 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 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.