... Momentum Trading DOW Stocks & ETFs … Stock Market Analysis
STOCKS ON PACE FOR BEST TWO YEARS IN A QUARTER CENTURY
(WSJ)
“The S&P 500 has climbed 24%, notching 57 record
closes as the economy remained healthy, inflation ticked lower and an AI-fueled
rally in big tech stocks powered on. Even with a
stumble in the last few trading days, the broad U.S. stock
index is on pace for its best consecutive
years since 1997 and 1998, according to Dow Jones Market Data,
during the lead-up to the bursting of the dot-com bubble... the biggest tech
stocks continued to do much of the work of powering the S&P 500 higher.
Through Dec. 24, the Magnificent Seven—Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia and Tesla—accounted for more
than 53% of the stock index’s total return...” Story at...
https://www.wsj.com/finance/stocks/stocks-on-pace-for-best-two-years-in-a-quarter-century-c5b5f9b3?mod=md_usstk_news
MARKET REPORT / ANALYSIS AS OF 1PM FRIDAY
-Tuesday the S&P 500 declined about 0.4% to 5882.
-VIX slipped about 0.4% to 17.35. (Options players don’t
seem very worried.)
-The yield on the 10-year Treasury rose (compared to
about this time, prior trading day) to 4.573%.
MY TRADING POSITIONS:
XLK – Holding since the October 2022 lows. Added more 9/20.
SSO – added 12/20. (IRA acct.)
SPY – added 12/20. (IRA acct.)
QLD – added 12/20. (IRA acct.)
CURRENT SUMMARY OF APPROXIMATELY 50 INDICATORS:
Today, of the 50-Indicators I track, 19 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) remained -14 (14 more Bear
indicators than Bull indicators).
TODAY’S COMMENT
As I noted yesterday, a crash is aways coming – we just
don’t know when. Looking back, we note that my indicators got me out at or near
the top of the Financial Crisis, the Covid pandemic and the 25% decline in
2022. I called the bottoms within days of these crisis’ except for Covid when I
waited for a retest of the low that never happened – we learned from that one.
I would expect we’ll see the signs of a crash before it
starts in earnest. So far, those signs
have not occurred. One important sign is a narrowing of breadth at an all-time
high. While breadth has narrowed during the recent weakness, almost 5% of
issues on the NYSE made new 52-week highs when the S&P 500 made its
all-time high on 6 December. That is not a stat that is associated with
crashes; for now, no crash is forecast.
The bull-bear indicator spread remained -14 today. It was
-18 at the 19 December low so there is a bullish divergence between the indicators
and the S&P 500 value. This is indicated by green arrows on the above chart.
The Index dropped 1% below its 50-dMA and Tuesday’s close
was 0.2% above the closing low of 5867 on 19 December. Internals were uniformly
better, suggesting a bottom. The fly in
the ointment? I’d prefer a lower-low for this analysis and we didn’t get that
today. Is it close enough? Probably yes, so my guess is that the weakness is
ending.
One third of all volume today was unchanged volume and
that qualifies as High-unchanged volume. As I’ve often said, many believe that
this indicator suggests investor confusion at market turning points. The trend
has been down for a while so this suggests a reversal higher is in the works;
however, “High-unchanged-volume” is not one of my indicators because it is
often wrong.
BOTTOM LINE
I think the weakness is ending, but then, I predicted this
a week ago, too. (Why do you read this blog?)
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 improved to HOLD. (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 70% stocks, including stock mutual funds and ETFs. 50%
invested in stocks is a normal position. (75% is my max stock allocation when I
am confident that markets will continue higher; 30% in stocks is my Bear market
position.)
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.
