Navigate the Stock Market: September 2024

Monday, September 16, 2024

Bought an ETF

I added SSO to my holdings today and that pushed my % invested in stocks to about 55%. Indicators improved slightly today, based on projected volumes and data at the close. They were already very bullish. I will wait to see if the S&P 500 can make a new high before I get too bullish.

Friday, September 13, 2024

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

Political commentary from Michael Ramirez at...
https://michaelramirez.substack.com/p/michael-ramirez-bright-side-09-12

BIDEN’S LEGAL DEFEATS (WSJ)
“President Biden considers himself a law-abiding fellow. But when it comes to living within the law as established by Congress, his Administration is the most lawless in long memory. His regulators keep rewriting laws as they see fit, and the result is that they keep losing in court in humiliating fashion... to illustrate the breadth of the law-breaking, we’re providing a summary of the legal defeats across five of the most lawless agencies...
Net neutrality rule.
National Association of Broadcasters v. FCC.
Student loans.
Title IX.
Clean Power Plan.
Waters of the U.S.
Good Neighbor Plan.
Noncompete ban.
Welsh Carson antitrust case.
Administrative law judges.
Meta acquisition.
Microsoft purchase of Activision Blizzard.
Proxy advisory rule.
Private fund disclosure rule.
Debt Box.
Stock buyback rule.
Grayscale.
Ripple.
...This is an extraordinary record of lawlessness, and note the variety of judges who have ruled in these cases. They illustrate the degree to which the progressive administrative state simply disregards the law as its avatars seek to impose their will on Americans without the consent of the governed.... Americans are fortunate the Founders created an independent judiciary to block this will to undemocratic power.” – The WSJ Editorial Board. Opinion at...
https://www.wsj.com/opinion/biden-administration-legal-defeats-courts-sec-epa-ftc-fcc-gary-gensler-lina-khan-regulation-fc496d28?mod=opinion_lead_pos1
My cmt: See the above article to read the specifics of each case and for additional commentary.

ABC HARRIS-TRUMP DEBATE BIAS (WSJ)
“...as we reviewed the [debate] video and compared notes, we became concerned about the role of ABC News and what it did to our democracy. The moderators, who were supposed to be neutral referees, had decided in advance they were going to “fact check” Mr. Trump but not Ms. Harris.
She enlisted every charge ever leveled against Mr. Trump, regardless of the truth. That included, to name a few, the false claims that he favors a national abortion ban and opposes in vitro fertilization, that he called neo-Nazis in Charlottesville, Va., “very fine people,” and that he threatened a “bloodbath” if he loses the election.
Each is untrue...
... Time and again we find that supposedly neutral democratic institutions have been corrupted by bias...ABC undermined the system for everyone.” - Mark Penn, pollster and adviser to Bill and Hillary Clinton and Andrew Stein, President, York City Council, 1986-93.” Commentary at...
https://www.wsj.com/opinion/abcs-bias-deprived-voters-of-a-fair-debate-2024-presidential-election-trump-harris-01410617?mod=opinion_lead_pos7

UNIV OF MICHIGAN SENTIMENT (Yahoo Finance)
“U.S. consumer sentiment improved in September amid subsiding inflation, though Americans remained cautious ahead of the November presidential election, a survey showed on Friday. The University of Michigan's preliminary reading on the overall index of consumer sentiment came in at 69.0 this month, compared to a final reading of 67.9 in August... "A growing share of both Republicans and Democrats now anticipate a Harris win," said Surveys of Consumers Director Joanne Hsu.” Story at...
https://finance.yahoo.com/news/us-consumer-sentiment-rises-september-143056881.html

MARKET REPORT / ANALYSIS
-Friday the S&P 500 rose about 0.5% to 5526.
-VIX declined about 0.7% to 16.56.
-The yield on the 10-year Treasury declined to 3.657% (compared to about this time, prior trading day).

MY TRADING POSITIONS:
XLK – Holding since the October 2022 lows.
XLK – reduced 9/9.
UWM – added 7/15.
QLD – added 7/24. Reduced 9/6.

CURRENT SUMMARY OF APPROXIMATELY 50 INDICATORS:
The Bull/Bear Spread improved to a strong BULL position at 2 Bear-signs and 19-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) improved to +17 (17 more Bull indicators than Bear indicators). The 10-dMA reversed upward. The 10-day will lag the indicators, but I like to use the 10-day to minimize chances of being whipsawed. This is a buy signal.

TODAY’S COMMENT:
We got a Buy-signal today from the 50-day indicator. That’s good and I’ll buy some stocks on Monday. I am reminded that we have a very strong signal now, but we’ve seen strong, Bull-signals fail in the past. There were only 3 Bear-signs and 21 Bull-signs at the top on 28 March before a 6% pullback. This time is different: the S&P 500 is below the bottom of its trend line, not at the top like it was in March; the Index is coming out of weakness, not at a top as it was then. I probably won’t go all-in until the Index breaks above its bottom trend line.

BOTTOM LINE
Time to add to stocks. I am cautiously bullish.

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 BUY. (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. Monday I’ll probably increase stock holdings to about 60%. I’m usually about 50% invested in stocks when markets are stretched. (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.

Thursday, September 12, 2024

PPI ... Jobless Claims ... Momentum Trading DOW Stocks & ETFs … Stock Market Analysis ...

The Bull/Bear, 50-Indicator spread (Bull Indicators minus Bear Indicators) improved to +5 (5 more Bull indicators than Bear indicators). The 10-dMA remains down. The 10-day will lag the indicators, but I like to use the 10-day to minimize chances of being whipsawed.

TODAY’S COMMENT:
There were plenty of bull-signs today: The McClellan Oscillator turned positive and that cancels the Hindenburg Omen signals that occurred over the last 2 days. (They didn’t last long!); The S&P 500 climbed above its 50-Dma; The 10-dMA of Breadth (% of stocks advancing on the NYSE) broke above 50%, i.e., half of all stocks on the NYSE have been rising over the last 2 weeks. There were others, too, evidenced by the 50-Indicator spread.

It looks like the pullback is over, but I will wait until the 10-dMA of the 50-indicator spread turns up before I increase my stock holdings.

BOTTOM LINE
I’m neutral waiting for the 50-Indicator spread to turn up. It is still falling.

ETF - MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs (Ranked Daily) ETF ranking follows:

My basket of Market Internals improved to BUY. (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 when markets are stretched. (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.

Wednesday, September 11, 2024

CPI ... Crude Inventories ... Momentum Trading DOW Stocks & ETFs … Stock Market Analysis ...

The Bull/Bear, 50-Indicator spread (Bull Indicators minus Bear Indicators) improved to -6 (6 more Bear indicators than Bull indicators). The 10-dMA continued down; that remains a concern.

TODAY’S COMMENT:
The S&P 500 dropped to 5408 thus creating a small double bottom at 5408. That was the low just 3-days ago, so while this was a double bottom, it may not be the strong bullish-signal for which we were hoping. It wasn’t the only bullish sign.

On Wednesday, there was a Bullish 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/

I mentioned the Hindenburg Omen signal yesterday. Today, there was another Hindenburg Omen. That signal remains in effect until the McClean Oscillator turns positive.

The 10-dMA of Breadth (% of stocks advancing on the NYSE) remains below 50%, i.e., half of all stocks on the NYSE have been falling over the last 2 weeks, although it did improve some today.

BOTTOM LINE
I am bearish, but not overly so. Indicators are bearish enough to suggest that this pullback is not over. Indicators are still suggesting a retest of the prior low of 5186, but that is far from certain. It is always possible that the low was around mid-day today and the pullback is over.

ETF - MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs (Ranked Daily) ETF ranking follows:

My basket of Market Internals improved to 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.)

Tuesday, September 10, 2024

Business Optimism ... Momentum Trading DOW Stocks & ETFs … Stock Market Analysis ...

Saw this on Facebook.

“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.

NFIB BUSINESS OPTIMISM (NFIB)
“The NFIB Small Business Optimism Index fell by 2.5 points in August to 91.2, erasing all of July’s gain. This is the 32nd consecutive month below the 50-year average of 98. The Uncertainty Index rose to 92, its highest level since October 2020. Inflation remains the top issue among small business owners, with 24% of owners reporting it as their top small business operating issue, down one point from July.” Report at...
https://www.nfib.com/surveys/small-business-economic-trends/

MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 rose about 0.5% to 5496.
-VIX declined about 2% to 19.10.
-The yield on the 10-year Treasury declined to 3.644% (compared to about this time, prior trading day).

MY TRADING POSITIONS:
XLK – Holding since the October 2022 lows.
XLK – reduced 9/9.
UWM – added 7/15.
QLD – added 7/24. Reduced 9/6.

CURRENT SUMMARY OF APPROXIMATELY 50 INDICATORS:
The Bull/Bear Spread improved slightly but remained in a bear position at 17 Bear-signs and 5-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) improved slightly to -12 (12 more Bear indicators than Bull indicators). The 10-dMA continued down, a bearish sign.

TODAY’S COMMENT:
Tuesday there was a Hindenburg Omen signal. Investopedia says, “The Hindenburg Omen is a technical indicator that was designed to signal the increased probability of a stock market crash. It compares the percentage of new 52-week highs and new 52-week lows in stock prices to a predetermined reference percentage that is supposed to predict the increasing likelihood of a market crash... The Hindenburg Omen looks for a statistical deviation from the premise that under normal conditions, some stocks are either making new 52-week highs or new 52-week lows. It would be abnormal if both were occurring at the same time.” From Investopedia at...
https://www.investopedia.com/terms/h/hindenburgomen.asp
As we’ve noted before, the Omen sends a lot of false warnings.

There were several Omens in mid-June about a month before the top of the 8.5% correction that bottomed on 5 August. Then, the Fosback Hi/Low Logic indicators were not confirming the signal. This time, the short-term Fosback Hi/Low Logic indicator is also bearish. The Fosback indicator looks at the number of new-highs and new-lows in a somewhat similar style of analysis as the Hindenburg Omen.

One indicator improved today - the slope of a moving average of new-highs is now headed higher. Overall, indicators are quite bearish.

The 10-dMA of Breadth (% of stocks advancing on the NYSE) dropped again and remains below 50%, i.e., half of all stocks on the NYSE have been falling over the last 2 weeks. That’s not a healthy market, but it doesn’t mean we are headed for a crash. It does show internals are getting worse, not better, and that suggests more pain ahead.

Similar to Friday’s comments:
To answer the question of how far this pullback may go, we see the following:
-The S&P 500 is 0.2% below its 50-day moving average and 6.6% above its 200-dMA.
-It is 6% above the 5 August bottom of the recent 8.5% correction.
This suggests that the bottom of this pullback is likely to be no more than 6 to 7% below today’s close. This looks like a retest of the recent low and not much more.

BOTTOM LINE
I am bearish, but not overly so. Indicators are bearish enough to suggest that this pullback is not over. I still expect a retest of the prior low of 5186.

ETF - MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs (Ranked Daily) ETF ranking follows:

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.)

Monday, September 9, 2024

NO, THE ELECTORAL COLLEGE IS NOT A RELIC OF SLAVERY (Real Clear Wire)
“Since the 2000 presidential election, the left has worked to undermine the legitimacy of the Electoral College, labeling it a relic of slavery. No doubt, if Donald Trump returns to the White House while again losing the popular vote, these attacks will be renewed with fervor. In fact, it has already begun as commentators denounce the undemocratic nature of the system. Just last month, the New York Times published a piece trashing the Constitution and asserting that the Electoral College’s only purpose was to protect slavery. These critiques are based on misconceptions and hostility toward the very structure of our Constitution... even if slavery had never existed, the states would never have agreed to a method of electing the president that stripped them of having a say in the matter. Protecting state sovereignty and ensuring less populous states had influence were key features of the compromise. Therefore, slavery may have been one of several reasons for the compromise, but it certainly was not the reason." Commentary from...
https://realclearwire.com/articles/2024/09/05/no_electoral_college_is_not_relic_slavery_151560.html
My cmt: As originally conceived, the Electoral College required that a Presidential candidate needed to win a majority of the states to be elected. Without the Electoral College, the U.S. becomes the United Cities of America – that’s where the population is – and look how well they are run.

MARKET REPORT / ANALYSIS
-Monday the S&P 500 rose about 1.2% to 5471.
-VIX fell about 13% to 19.45.
-The yield on the 10-year Treasury declined to 3.702% (compared to about this time, prior trading day).

MY TRADING POSITIONS:
XLK – Holding since the October 2022 lows.
XLK – reduced 9/9.
UWM – added 7/15.
QLD – added 7/24. Reduced 9/6.

CURRENT SUMMARY OF APPROXIMATELY 50 INDICATORS:
The Bull/Bear Spread declined again to a bear position at 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) declined to -13 (13 more Bear indicators than Bull indicators). The 10-dMA continued down, a bearish sign.

TODAY’S COMMENT:
The stock market Canary-in-the-Coal-Mine did not feel well today. The 10-dMA of Breadth (% of stocks advancing on the NYSE) dropped below 50%, i.e., half of all stocks on the NYSE have been falling over the last 2 weeks. That’s not a healthy market, but it doesn’t mean we are headed for a crash. It does show internals are getting worse, not better, and that suggests more pain ahead.

Similar to Friday’s comments:
To answer the question of how far this pullback may go, we see the following:
-The S&P 500 is 0.6% below its 50-day moving average and 6.2% above its 200-dMA.
-It is 5.5% above the 5 August bottom of the recent 8.5% correction.
This suggests that the bottom of this pullback is likely to be no more than 6% below today’s close. This looks like a retest of the recent low and not much more.

I reduced my invested position to about 50% Friday and again today. This is due to an abundance of caution and to limit losses. Indicators continue to suggest that this is not the time to be so far overinvested; 75% in stocks was too high for a retiree,

BOTTOM LINE
I reduced stock holdings, but I am not overly bearish. This pullback looks like a routine retest of the prior low of 5186. If so, why did I sell? Answer: I could be wrong.

ETF - MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs (Ranked Daily) ETF ranking follows:

DOW STOCKS - TODAY’S MOMENTUM RANKING OF THE DOW 30 STOCKS (Ranked Daily)

MONDAY MARKET INTERNALS (NYSE DATA)

My basket of Market Internals declined to 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.)

Friday, September 6, 2024

Unemployment Rate ... Jobs Report ... Momentum Trading DOW Stocks & ETFs … Stock Market Analysis ...

From...
https://www.reviewjournal.com/opinion/michael-ramirez/cartoon-the-policy-harris-needs-to-propose-next-3148340/?utm_campaign=widget&utm_medium=latest&utm_source=opinion_michael-ramirez&utm_term=CARTOON%3A%20The%20policy%20Harris%20needs%20to%20propose%20next

"Think of how stupid the average person is, and realize half of them are stupider than that." - George Carlin

“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.

AUGUST JOBS REPORT / UNEMPLOYMENT RATE (Yahoo Finance)
“Data from the Bureau of Labor Statistics released Friday showed the labor market added 142,000 nonfarm payroll jobs in August, fewer additions than the 165,000 expected by economists... the unemployment rate fell to 4.2% from 4.3% in July.” Story at...
https://finance.yahoo.com/news/august-jobs-report-unemployment-rate-falls-to-42-labor-market-adds-142000-jobs-182656446.html

MARKET REPORT / ANALYSIS
-Friday the S&P 500 fell about 1.7% to 5408.
-VIX rose about 12% to 22.38. (The Options Players don’t seem worried.)
-The yield on the 10-year Treasury declined to 3.716% (compared to about this time, prior trading day).

MY TRADING POSITIONS:
XLK – Holding since the October 2022 lows.
XLK – added more 7/26.
UWM – added 7/15.
QLD – added 7/24. Reduced 9/6.

CURRENT SUMMARY OF APPROXIMATELY 50 INDICATORS:
The Bull/Bear Spread declined to a bear position at 14 Bear-signs and 5-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 to -9 (9 more Bear indicators than Bull indicators). The 10-dMA continued down, a bearish sign.

TODAY’S COMMENT:
Indicators continue down. Breadth indicators have not broken down yet and they comprise 3 of the 5 bullish indicators Friday. At least that is one point of good news.

The S&P 500 has dropped 4.2% from its recent high at the end of August and 4.6% below the all-time high of 5667.

To answer the question of how far this pullback may go, we see the following: The S&P 500 is 0.3% above its 50-day moving average and 5.1% above its 200-dMA. It is 4.6% above the 5 August bottom of the recent 8.5% correction. This suggests that the bottom of this pullback is likely to be no more than 5% below today’s close. This looks like a retest of the recent low and not much more. I doubt that the 50-dMA will hold.

I reduced my invested position to about 50% Friday. This is due to an abundance of caution and to limit losses. Indicators continue to suggest that this is not the time to be so far overinvested - 75% in stocks was too high for me since risk is elevated.

BOTTOM LINE
I reduced stock holdings, but I am not overly bearish. This pullback looks like a routine retest of the prior low of 5186. If so, why did I sell? Answer: I could be wrong.

ETF - MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs (Ranked Daily) ETF ranking follows:

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 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.

Thursday, September 5, 2024

ADP Employment ... Jobless Claims ... ISM Non-Manufacturing ... Beige Book ... 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.

WUHAN LAB RELEASES ANOTHER DEADLY VIRUS (Daily Mail via msn.com)
“The Chinese lab that FBI director Chris Wray and members of Congress believe likely leaked Covid-19 may have also released of a 'highly evolved' strain of polio. A bombshell new study suggests that this strain, which infected a four-year-old boy amid a wider viral outbreak in China 's Anhui province, evolved from a type of polio almost exclusively used in vaccine production and laboratory settings. Researchers at France 's Pasteur Institute examined the novel polio strain's genome, catalogued as 'WIV14' by the infamous Wuhan Institute of Virology , showing that the mutated virus matched this typically tightly held lab strain 'higher than 99 percent.'” Story at...
Study: Chinese lab linked to Covid leak released another deadly virus (msn.com)

BEIGE BOOK (Barchart)
“...the release of the Fed’s Beige Book Wednesday afternoon sparked growth concerns. The Fed Beige Book stated the number of Fed districts reporting flat or declining activity rose to nine in the month to August 26, up from five in the prior period, and that "employers were more selective with their hires and less likely to expand their workforces, citing concerns about demand and an uncertain economic outlook." Story at...
https://www.barchart.com/story/news/28370817/stocks-settle-mixed-as-fed-beige-book-raises-growth-concerns

ADP EMPLOYMENT (ADP via PR Newswire)
“Private sector employment increased by 99,000 jobs in August and annual pay was up 4.8 percent year-over-year, according to the August ADP® National Employment Report™ ... "The job market's downward drift brought us to slower-than-normal hiring after two years of outsized growth," said Nela Richardson, chief economist, ADP. "The next indicator to watch is wage growth, which is stabilizing after a dramatic post-pandemic slowdown." Press release at...
https://www.prnewswire.com/news-releases/adp-national-employment-report-private-sector-employment-increased-by-99-000-jobs-in-august-annual-pay-was-up-4-8-302239359.html
My cmt: The jobs growth was well below estimates so this was not good for the markets.

JOBLESS CLAIMS (AP News)
“Jobless claims fell by 5,000 to 227,000 for the week of Aug. 31, the Labor Department reported Thursday. That’s the fewest since the week of July 6, when 223,000 Americans filed claims. It’s also less than the 230,000 new filings that analysts were expecting.” Story at...
https://apnews.com/article/unemployment-benefits-jobless-claims-layoffs-labor-c6fa106a41d896ef3b62c3a2810ca1da

ISM NON-MANUFACTURING PMI (ISM via PR Newswire)
“In August, the Services PMI^® registered 51.5 percent, 0.1 percentage point higher than July's figure of 51.4 percent. The reading in August marked the sixth time the composite index has been in expansion territory in 2024.” Press release at...
https://www.prnewswire.com/news-releases/services-pmi-at-51-5-august-2024-services-ism-report-on-business-302238390.html

MARKET REPORT / ANALYSIS
-Thursday the S&P 500 fell about 0.3% to 5503.
-VIX fell about 7% to 19.90. (The Options Players don’t seem worried.)
-The yield on the 10-year Treasury declined to 3.731% (compared to about 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 declined, but remained Neutral at 11 Bear-signs and 9-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 to -2 (2 more Bear indicators than Bull indicators). The 10-dMA continued down, a bearish sign and that’s a worry.

TODAY’S COMMENT:
Thursday, unchanged volume was very high. As I’ve often said, many believe that this indicator suggests investor confusion at market turning points. The trend has been down for the last 3-days and the Index is below its lower trend line (from 25 October). Does that mean a reversal higher is in the works? I don’t know. Perhaps the best we can say is that investors are confused. It seems to me that a move higher or lower is equally likely. “High-unchanged-volume” is not one of my indicators because it is often wrong.

The 50-indicator spread is still falling and the futures are down as I write this (9pm Thursday). I am going to cut my invested position down closer to 50% tomorrow. Indicators are suggesting that this is not the time to be so far overinvested. On 30 August, the S&P 500 was only about 0.3% below its all-time high. The % of new-highs on that day was an above average 10% and that suggests (but does not guarantee) that this pullback will be less than 10%. Still, I am overinvested for a retiree and losses should be avoided. Working folks can take more risks because they have time to recoup losses, but in general, avoiding (or minimizing) losses is always a good idea.

BOTTOM LINE
Unless Friday is a strong up-day. I will lower stock investments. The 10-day moving average of 50-indicators is still falling and that’s a worry.

ETF - MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs (Ranked Daily) ETF ranking follows:

...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.) As noted above, I’ll reduce stock holdings Friday.

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.

Wednesday, September 4, 2024

Durable Goods ... Factory Orders ... 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.

HARRIS’ UNREALIZED GAINS TAX IS HISTORICALLY STUPID (The Hill)
“I see a lot of people on Twitter desperately trying to defend the insane, suicidal tax proposed by Vice President Kamala Harris on “unrealized capital gains.” It’s been a while since anyone has proposed a dumber idea, so in that sense, at least, she is a historic candidate. And those who think it’s a good idea are historically stupid.” - Derek Hunter, Opinion Contributor. Story at...
Opinion: Kamala Harris’s ‘unrealized gains tax’ — so dumb it’s truly historic (msn.com)

“Let me tell you why I don’t think a blanket tax on unrealized gain is a good thing. I mean, let’s say you’re an entrepreneur, you create a company, and it gets to $100 million or $200 million on paper,” Khanna said. “Now if you’re taxing that, you’re probably going to force that person to sell it. They’re probably going to sell it to private equity. Do you really want the entrepreneurs to be forced to sell their companies to larger institutions and to decline in value? I just — I don’t think that that’s what you want for a startup ecosystem.” - Ro Khanna, Democrat, US House of Representatives, California

DURABLE GOODS (Advisor Perspectives)
“New orders for manufactured durable goods rose to $289.65B in July, the highest level since November. This represents a 9.9% increase from the previous month and better than the expected 4.0% growth. The series is up 1.3% year-over-year (YoY).” Analysis at...
https://www.advisorperspectives.com/dshort/updates/2024/08/26/durable-goods-orders-july-2024

FACTORY ORDERS (RTT News)
“After reporting a steep drop by new orders for U.S. manufactured goods in the previous month, the Commerce Department released a report on Wednesday showing factory orders rebounded by slightly more than expected in the month of July. The Commerce Department said factory orders spiked by 5.0 percent in July after plunging by 3.3 percent in June. Economists had expected factory orders to surge by 4.7 percent.” Story at...
https://www.rttnews.com/3472955/u-s-factory-orders-rebound-slightly-more-than-expected-in-july.aspx

MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 fell about 0.2% to 5520.
-VIX rose about 3% to 21.32.
-The yield on the 10-year Treasury declined to 3.757% (compared to about 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 Neutral at 10 Bear-signs and 12-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 +2 (2 more Bull indicators than Bear indicators). The 10-dMA continued down, a bearish sign and that’s a worry.

TODAY’S COMMENT:
Although I don’t use this indicator, the 7-Day VIX Rate of Change is suggesting the bottom was yesterday. As Tom McClellan wrote, "...any reading above around +20% [for VIX ROC] is a pretty good sign of an oversold bottom for stock prices, one that is worthy of a bounce...” Wednesday’s VIX-ROC was 34.

There are other signals that are not as optimistic:
-The S&P 500 closed below its lower trend line on consecutive days. That can be a signal for a trend change. In this case it would signal a possible trip to the prior recent low of 5186.
-Tom Lee was on CNBC’s “Squawk Box” Tuesday and he said that a 7-10% pullback is likely due to election and Fed concerns.
-The 10-day moving average of 50-indicators is falling.

I would have cut my leveraged positions today, but Verizon cut my service because they haven’t gotten my payment. What used to be a 6-week grace period is now down to 2! Verizon non-customer support was of no use. The foreigners at the phone-center had no explanation and no fix so I decided to wait until they get my payment (mailed more than a week ago). That meant my 2-part login process at my broker was not available. I could have called a human there and sold positions, but that seemed like too much trouble.

BOTTOM LINE
Time to get neutral and watch indicators. The 10-day moving average of 50-indicators is now falling and that’s a worry.

ETF - MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs (Ranked Daily) ETF ranking follows:

...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.