PCE Prices ... Jobless Claims ... Chicago PMI ... 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.
 
"This is maybe the most dangerous market of my career, and that includes 1987's crash, that includes the savings and loan debacle market of the early '90s, that includes the 1999 to 2009 lost decade in the S&P 500 in the dot-com bubble. This is the most difficult market of my 45 years." -  Bill Smead, Smead Value Fund (SMVLX), May 2025.
 
PCE PRICE (Yahoo Finance)
“The "core" Personal Consumption Expenditures (PCE) index, which strips out food and energy costs and is closely watched by the central bank, rose 0.3% from the prior month...On an annual basis, core prices rose 2.8%, above the 2.7% economists had expected...”

Story at...
https://finance.yahoo.com/news/feds-preferred-inflation-gauge-shows-price-increases-accelerated-in-june-amid-tariff-uncertainty-124028246.html
 
JOBLESS CLAIMS (Reuters)
“Initial claims for state unemployment benefits rose 1,000 to a seasonally adjusted 218,000 for the week ended July 26, the Labor Department said on Thursday. Economists polled by Reuters had forecast 224,000 claims for the latest week.” Story at...
https://www.reuters.com/world/us/us-weekly-jobless-claims-rise-marginally-2025-07-31/
 
CHICAGO PMI (Advisor Perspectives)
“The Chicago Purchasing Managers’ Index (Chicago Business Barometer) rose for the first time in four months to its highest level since March, however remained in contraction territory for the 20th consecutive month. The index jumped 6.7 points to 47.1 in July, the largest monthly increase in over a year. The latest reading was well above the forecast of 41.9.” Commentary and analysis at...
https://www.advisorperspectives.com/dshort/updates/2025/07/31/chicago-pmi-jumps-to-4-month-high
 
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 declined about 0.4% to 6339.
-VIX rose about 8% to 16.72.
-The yield on the 10-year Treasury rose to 4.380% (compared to about this time prior market day).
 
MY TRADING POSITIONS:
SPY – added 6/5/2025 & 6/27/2025
XLK – added 6/27/2025
 
CURRENT SUMMARY OF APPROXIMATELY 50 INDICATORS:
Today, of the 50-Indicators I track, 14 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.)

TODAY’S COMMENT
Indicators blew up today; the daily, bull-bear spread of 50-indicators declined to a bearish -6 (6 more Bear indicators than Bull indicators). I consider +5 to -5 the neutral zone. The 10-dMA curve of the spread reversed downward – a bearish sign.
 
There were significant bear signs today:
-There was Xtreme high, unchanged-volume.
Ok, this one, by itself, isn’t significant and I know; you’re tired of reading my standard note:
As I’ve often said, many believe that this indicator suggests investor confusion at market turning points. Are markets turning back down? That could always happen and the indicators are trending down now. Still, “High-unchanged-volume” is not one of my indicators because it is often wrong.
 
-Thursday there was a Hindenburg Omen.
“The Hindenburg Omen is a technical analysis indicator that attempts to predict stock market crashes by identifying periods of market instability. It is named after the Hindenburg disaster, a German airship that caught fire in 1937. The omen is triggered when specific market conditions, such as a large number of stocks making both new 52-week highs and lows, occur within a short time frame.” – Investopedia.
Hindenburg Omens don’t have a great record of being correct either.
 
-Thursday there was another Bearish Outside Reversal Day. We saw the first 2 days ago.
“An outside reversal is a price pattern that indicates a potential change in trend on a price chart. The two-day pattern is observed when a security’s high and low prices for the day exceed the high and low of the previous day’s trading session... Technical analysts and experienced traders prefer to build trading signals using this identification in conjunction with other information such as trend, support and resistance or technical studies.” – Investopedia.
 
-Breadth declined. The 10-dMA of issues advancing on the NYSE dropped below 50%, i.e., more than half of the issues on the NYSE have declined over the last 2 weeks.
 
These are not good signs, but news was not all bad - charts are Ok for now. I drew new channels on the S&P 500 chart (shown above on the “Summary of 50 Indicator Spread” chart as solid black lines) yesterday.  The new lines recognize that the S&P 500 advance has cooled some and is no longer “parabolic.” The bottom trendline is around 6300 so we don’t want to see the S&P 500 drop too far below that level.  
 
The big worry is that 52-week, new-high data at the most recent all-time high for the S&P 500 suggested that a correction of >10% was coming. It appears to here now.
 
I’ll sell XLK Friday. It has a higher Beta than the S&P 500, my other trading position.
 
BOTTOM LINE
Concerning signs got more concerning; I’ll sell my XLK position Friday, but not if there is a big down-day, say greater than 1% on the S&P 500.
 
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 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 55% stocks, including stock mutual funds and ETFs. 50% invested in stocks is a normal, conservative position for a retiree. (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.