Consumer Confidence ... Dallas FED Services ... Momentum Trading DOW Stocks & ETFs … Stock Market Analysis ...

 
Busy day – I’ll have to be quick.
 
“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.
 
CONSUMER CONFIDENCE (Conference Board)
“Consumer confidence recorded the strongest monthly gain since March 2021, but still did not break free of the narrow range that has prevailed over the past two years,” said Dana M. Peterson, Chief Economist at The Conference Board. “In October’s reading, all five components of the Index improved... October’s increase in confidence was broad-based across all age groups and most income groups.” Press release at...
https://www.conference-board.org/topics/consumer-confidence
 
DALLAS FED SERVICES (Dallas FED)
“Texas service sector activity growth continues, outlook improves. Texas service sector activity expanded at about the same pace in October as the prior month, according to business executives responding to the Texas Service Sector Outlook Survey. The revenue index, a key measure of state service sector conditions, was little changed at 9.2.” Report at...
https://www.dallasfed.org/
 
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 rose about 0.2% to 5833.
-VIX declined about 2% to 19.34.  
-The yield on the 10-year Treasury declined (compared to about this time, prior trading day) to 4.256%.
 
MY TRADING POSITIONS:
XLK – Holding since the October 2022 lows.  Added more 9/20.
QLD – added 7/24.
SSO – added 10/16.
SPY – added 9/19 & more 10/16
 
CURRENT SUMMARY OF APPROXIMATELY 50 INDICATORS:
Today, of the 50-Indicators I track, 13 gave Bear-signs and 8 were Bullish. The rest are neutral. (It is normal to have a lot of neutral indicators since many of the indicators are top or bottom indicators that will signal only at extremes.)

The daily Bull/Bear, 50-Indicator spread (Bull Indicators minus Bear Indicators, red curve in the chart above) declined to -5 (5 more Bear indicators and Bull indicators).
 
TODAY’S COMMENT:
Today’s Bull-Bear spread of -5 is bearish. The 10-dMA of the 50-Indicator Spread (purple line in the chart above) remained bearish since it is still moving lower. (I follow the 10-dMA for trading buy-signals and as an indicator for sell signals.)
 
Indicators remain under stress. I’m beginning to wonder if we’ll see a quick drop.  I still don’t expect a big drop, but the S&P 500 has been treading water to moving slightly higher while internals have been deteriorating and a quick fall is not out of the question.
 
Indicators are suggesting that the decline may resume, but signals are not particularly strong and that call has not been proven correct so far.
 
The 50-dMA is about 2-1/2% lower than today’s close and that’s a strong level of support. I don’t expect to see a big drop when it does happen assuming we see a decline fairly soon.
 
Before I get too bearish I need to note there was a new bullish sign today.  Tuesday 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/
 
Who knows, with Consumer confidence rising, we might even see a pre-election bounce higher.
 
BOTTOM LINE
I’m neutral on the markets. If the pullback resumes, the drop should be small.
 
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 has been bouncing back and forth, but today it declined to SELL. (My basket of Market Internals is a decent trend-following analysis that is most useful when it diverges from the Index.) 
 
 
 

...My current invested position is about 65% 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 confident that markets will continue higher.)
 
I trade about 15-20% of the total portfolio using the momentum-based analysis I provide here. When I see bullish signs, 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.