Unemployment Rate ... Payroll Report ... ISM Manufacturing ... Construction Spending ... 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.

Political commentary from Michael Ramirez at...
https://michaelpramirez.com/index.html#/
 
PAYROLL REPORT / UNEMPLOYMENT RATE (Morningstar)
“The US economy added 12,000 jobs in October, according to the latest report from the Bureau of Labor Statistics... The unemployment rate held steady at 4.1%... The BLS said job growth was likely depressed by the two hurricanes that hit the southeast in October. In addition, strike activity was a detractor.” Story at...
https://www.morningstar.com/economy/october-us-jobs-report-12000-rise-payrolls-likely-depressed-by-hurricanes
 
ISM MANUFACTURING (prnewswire)
"The Manufacturing PMI® registered 46.5 percent in October, 0.7 percentage point lower compared to the 47.2 percent recorded in September. This is the lowest Manufacturing PMI® reading in 2024. The overall economy continued in expansion for the 54th month after one month of contraction in April 2020. (A Manufacturing PMI® above 42.5 percent, over a period of time, generally indicates an expansion of the overall economy.)” Press release at...
https://www.prnewswire.com/news-releases/manufacturing-pmi-at-46-5-october-2024-manufacturing-ism-report-on-business-302293215.html
 
CONSTRUCTION SPENDING (Forest Economic Advisors)
“A closer look at the US Census Bureau’s construction spending report for September, with a focus on residential spending and additional analysis provided by the National Association of Home Builders (NAHB), reveals that private residential construction spending trended up 0.2%. Year-over-year, construction spending was 4.1% higher.” From...
https://getfea.com/end-use/us-private-residential-construction-spending-increases-0-2-in-september
 
MARKET REPORT / ANALYSIS
-Friday the S&P 500 declined about 0.4% to 5729.
-VIX declined about 6% to 21.88.  
-The yield on the 10-year Treasury rose (compared to about this time, prior trading day) to 4.386%.
 
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 4 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 -12 (12 more Bear indicators and Bull indicators).
 
TODAY’S COMMENT:
Today’s Bull-Bear spread of -12 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.) There’s worse news – there were only 4 bull indicators.  2 of those are related to breadth.  Breadth has been weak on a shorter 10-day trend, but it has been OK on longer term measures. The other 2 bull signs are: (1) XLU (Utilities) are underperforming the S&P 500 and (2) the statistical-analysis that I mentioned yesterday is suggesting a bottom due to the large down-day at the 50-dMA.
 
There were other bear signs, today there was another Hindenburg Omen (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 think the biggest worry now is the declining daily, bull-bear spread. We have seen that if the number of Bull-indicators drops to zero, the stock performance that followed has been dismal. On a positive note, the S&P 500 closed only slightly higher than its 50-dMA on Thursday and that may be enough to put an end to the weakness.
 
BOTTOM LINE
As noted yesterday:
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.
 
If the daily bull-Bear spread improves I’ll probably increase stock holdings.
 
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 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.