GDP / PCE Prices ... Jobless Claims ... 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.
 
GDP / PCE PRICES (BEA)
“Real gross domestic product (GDP) increased at an annual rate of 2.3 percent in the fourth quarter of 2024 (October, November, and December), according to the advance estimate released by the U.S. Bureau of Economic Analysis. In the third quarter, real GDP increased 3.1 percent...
...The price index for gross domestic purchases increased 2.2 percent in the fourth quarter, compared with an increase of 1.9 percent in the third quarter. The personal consumption expenditures (PCE) price index increased 2.3 percent, compared with an increase of 1.5 percent. Excluding food and energy prices, the PCE price index increased 2.5 percent, compared with an increase of 2.2 percent.” Press release at...
https://www.bea.gov/news/2025/gross-domestic-product-4th-quarter-and-year-2024-advance-estimate
 
JOBLESS CLAIMS (Reuters)
“Initial claims for state unemployment benefits dropped 16,000 to a seasonally adjusted 207,000 for the week ended Jan. 25, the Labor Department said on Thursday. Economists polled by Reuters had forecast 220,000 claims for the latest week.” Story at...
https://www.reuters.com/markets/us/us-weekly-jobless-claims-decline-more-than-expected-2025-01-30/
 
NYSE A-D LINE DIVERGENCE (McClellan Financial Publications)
“The SP500 on Jan. 23, 2025 was able to climb up to a new all-time closing high.  But it is not yet dragging along the rest of the market, and this may indicate a problem. This week's chart shows a bearish divergence evident in the NYSE's cumulative Daily Advance-Decline Line... One important point is that a divergence represents a "condition" and not a "signal".  Just because we notice a divergence does not mean that it has to matter right away.  When they do matter, it is on their own schedule.” – Tom McClellan.  
 
Analysis at...
https://www.mcoscillator.com/learning_center/weekly_chart/nyse_a-dine_divergence/
 
NTSM ANALYSIS OF BREADTH (NTSM)
 

As shown in the chart above, my analysis of Breadth shows a similar divergence in breadth, but as Tom McClellan notes, divergence is not a signal. My signal is bearish if the 100-dMA of Issues advancing on the NYSE is below 50%. It’s not there yet (The right x-axis in the above chart is a %). In my system, breadth is still issuing a buy signal.
 
MARKET REPORT / ANALYSIS AS OF 1PM FRIDAY
-Thursday the S&P 500 rose about 0.5% to 6071.
-VIX declined about 1.2% to 15.84.
-The yield on the 10-year Treasury was little changed (compared to about this time, prior trading day) at 4.535%.
 
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.)
NVDA – added 1/6/2025.
 
The decline in Nvidia appears to be overblown. Regarding competition to Nvidia, Dan Ives (Managing Director and Senior Equity Research Analyst covering the Technology sector at Wedbush Securities) says, “The threat is minimal.” He recommended buying Nvidia. I will hold NVDA and see what develops... 
 
CURRENT SUMMARY OF APPROXIMATELY 50 INDICATORS:
Today, of the 50-Indicators I track, 5 gave Bear-signs and 15 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 +10 (10 more Bull indicators than Bear indicators).
 
TODAY’S COMMENT
Overall, the daily, bull-bear spread of 50-indicators is a bullish +10. The 10-dMA of the spread is also moving higher, another bull-sign.
 
Microsoft made concerning comments about future revenues so it was down late in after-hours trading yesterday and down in today’s trading.  Other tech companies were more optimistic – Apple was up 3% after-hours and IBM was up 13% on the day.
 
BOTTOM LINE
I remain 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
 
THURSDAY MARKET INTERNALS (NYSE DATA)

My basket of Market Internals declined 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 75% 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.