“I know not with what weapons World War III will be
fought, but World War IV will be fought with sticks and stones.” - Albert
Einstein
“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.
Political commentary from Michael Ramirez at...
https://michaelpramirez.com/index.html#/
“In perhaps seven states, a voter might conceivably feel
an obligation to vote because the outcome is in doubt. To the rest, I say:
relax. We’ve been bludgeoned unconscionably but the election isn’t existential.
To conservatives, it’s a pretty good year. Kamala Harris is their best possible
Democrat—no apparent leadership gene, elevated by accident, dependent on
reflexive and droning support from progressives whom 95% of America don’t
identify with.
There are many paths to a revived conservative agenda,
including tying up President Harris in knots while getting the next GOP
generation ready.” - Holman W.
Jenkins, Jr.. member of the editorial board of The Wall Street
Journal. Opinion at...
https://www.wsj.com/opinion/conservatives-can-be-optimists-2024-presidential-election-10558c74
JOBLESS CLAIMS / PCE PRICE (Yahoo Finance)
“The number of Americans filing new applications for
unemployment benefits fell to a five-month low last week and consumer spending
increased more than expected in September, showcasing the economy's strength
heading into the final stretch of 2024... Though prices pushed higher last
month, inflation is firmly on a downward trend, with other data on Thursday
showing labor costs posting their smallest gain in more than three years in the
third quarter... Initial claims for state unemployment benefits dropped 12,000
to a seasonally adjusted 216,000 for the week ended Oct. 26...” tory at...
https://finance.yahoo.com/news/us-weekly-jobless-claims-fall-123827119.html
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 declined about 1.9% to 5705.
-VIX jumped about 14% to 23.16.
-The yield on the 10-year Treasury slipped (compared to
about this time, prior trading day) to 4.282%.
MY TRADING POSITIONS:
XLK – Holding since the October 2022 lows. Added more 9/20.
SSO – added 10/16.
SPY – added 9/19 & more 10/16
CURRENT SUMMARY OF APPROXIMATELY 50 INDICATORS:
Today, of the 50-Indicators I track, 16 gave Bear-signs
and 5 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 -11 (11 more
Bear indicators and Bull indicators).
TODAY’S COMMENT:
Today’s Bull-Bear spread of -11 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.)
Thursday 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.
The Fosback New-high/new-low Logic indicator uses a
similar analytic approach, but it is closer to buy than sell, so I won’t get
too worried about the Hindenburg signal.
I do statistical analysis of daily moves on the S&P
500. That was the indicator that gave us
the “Top within 20-days” warning because the market moves were too subdued
showing an unnatural calm. That calm
broke today with a panic indicator. The Panic Indicator
can be a positive or negative indicator. At a top it is a bear sign; at a
bottom it is a bull sign. Now, the
S&P 500 has fallen to its 50-dMA, so I consider this indicator bullish.
Unfortunately, it is one of only 5 bull-signs today. If the Index continues to
fall, I’ll be forced to re-evaluate and switch this indicator to bearish. And
speaking of statistical analysis...
Thursday was a statistically-significant. 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.
The S&P 500 closed only slightly higher than its
50-dMA and that may be enough to put an end to the weakness.
BOTTOM LINE
I’m neutral on the markets, even though the indicators
are bearish. I suspect that the weakness is close to finished. That’s not a well-informed
opinion – there’s not much evidence yet, other than the chart and a couple of statistical
indicators. We may have to wait until the election is over before the market
get’s out of its funk.
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 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 60% 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.
