Tuesday, August 12, 2025

CPI ... Momentum Trading DOW Stocks & ETFs … Stock Market Analysis ...

 
“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.
 
WHY THE FAR-RIGHT HATES CHURCHILL (WSJ – EXCERPT)
“The American podcaster Darryl Cooper—who has never written a history book, let alone one about World War II, but whom Tucker Carlson calls “America’s most honest historian”—has claimed that it was Churchill’s fault that the war escalated from the limited one that Adolf Hitler apparently wanted when he invaded Poland in September 1939. According to Cooper, Churchill was the “chief villain” of World War II, rather than any of the more obvious suspects. 
 
There are a number of problems with this theory, not least chronological. Churchill did not even enter the British government until two days after the Nazis’ invasion of Poland. Even then he was not in control of British decision-making, as he did not become prime minister until after Hitler had unleashed his blitzkrieg on Western Europe in May 1940...
... “The reason I resent Churchill so much for it,” Cooper told Carlson, “is that he kept this war going when he had no way [of winning]. He had no way to go back and fight this war. All he had was bombers…just rank terrorism.” More than that, once Hitler ripped up yet another treaty and invaded Russia in June of 1941, Churchill immediately made common cause with Stalin against Nazi Germany.
 
It is worth considering what might have happened had Churchill not urged these fateful choices....
... Neutrality in the face of Hitler would have meant that the 5,000 aircraft and 7,000 tanks and 51 million pairs of boots and the rest of the aid that Britain and America sent the U.S.S.R. would not have materialized. Nor would the invasion of Normandy have taken place while the Russians and Germans were fighting in Belarus.
Which leads to the obvious: With either Hitler or Stalin controlling all of Europe between Paris and Minsk, the world—including America—would have been in a vastly worse place than the one that Churchill and Roosevelt helped to fashion in 1945.” - Andrew Roberts, member of the House of Lords and author of “Churchill: Walking with Destiny.” Commentary at...
https://www.wsj.com/politics/why-the-far-right-hates-churchill-20fdc710
 
NOW TRUMP WANTS AN EXPORT TAX (WSJ)
“President Trump views tariffs as a toll that he alone gets to set for access to U.S. markets. Now he’s charging fees on U.S. companies for the purported privilege of exporting artificial-intelligence chips to China. Mark this as another step toward government control of private business.” – The Editorial Board, WSJ. Commentary at...
https://www.wsj.com/opinion/now-trump-wants-an-export-tax-4141f9a8?mod=opinion_lead_pos2
 
TRUMP EXTENDS CHINA TARIFF DEADLINE (CNBC)
“President Donald Trump has signed an executive order that will prevent high U.S. tariffs on Chinese goods from snapping back into effect for another 90 days, a White House official told CNBC.” Story at...
https://www.cnbc.com/2025/08/11/trump-china-tariffs-deadline-extended.html
 
CORRECTION COMING (Fortune)
“A question looms over Wall Street as it digests the stock market highs in the dog days of summer 2025: Is this another version of the dotcom bubble? Apollo’s Torsten Slok has already calculated that the top 10 S&P 500 companies today are more overvalued than in the late ’90s tech boom. Now the investment bank Stifel is predicting that even as “euphoric markets party like it’s 1999,” a stock market correction and stagflation are ahead. Stifel’s strategists, led by Barry Bannister and Thomas Carroll, wrote in a research note that they are simply “uncomfortable” with the S&P 500 gaining 32% off its April 7 intraday low as the latest GDP figures show the actual economy slowing almost to a crawl. They further warn that “hopium” is a powerful drug and that stock markets may be “whistling past the graveyard.” Story at...
America’s massive ‘money illusion’ is setting the S&P 500 up for a correction as stagflation takes hold, top analysts say
 
CPI (Yahoo Finance)
..."core" inflation, which excludes volatile food and energy costs, rose 0.3% over the past month, surpassing June's 0.2% uptick and marking the largest gain in six months. Annual core prices rose 3.1% in July, up from June’s 2.9% year-over-year increase... On a headline basis, CPI increased 2.7% on an annual basis in July, matching June's number and slower than economists' expectations of a 2.8% rise. Month over month, prices rose 0.2% compared to June's 0.3%...” Story at...
https://finance.yahoo.com/news/cpi-report-core-inflation-rises-by-most-in-six-months-stoking-tariff-driven-price-concerns-153654897.html
 
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 rose about 1.1% to 6446.
-VIX fell about 9% to 14.73.
-The yield on the 10-year Treasury rose to 4.289% (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, 4 gave Bear-signs and 19 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
The daily, bull-bear spread of 50-indicators drastically improved from -8 to +15 (15 more Bear indicators than Bull indicators). I consider +5 to -5 the neutral zone. The 10-dMA curve of the spread reversed higher too – a bullish sign. It is rare to see such a large reversal of indicators. There were none this large over the last year as shown in the above chart. It is bullish, but worrying, since this much bullish action may be too much.  
 
The S&P 500 made a new high today. New, 52-week highs on the NYSE were below average, but high enough so that this indicator is not sending a correction signal.
 
Breadth as measured by the % of issues advancing on the NYSE also improved. The Breadth improvement triggered a bullish reversal by the McClellan Oscillator which in turn, canceled the Hindenburg Omen that has been hanging around for more than a week. (It canceled yesterday’s Omen too.)
 
Technicals looked good today.  The news? It seemed mixed to me, but investors loved it and futures jumped higher before the open.
 
Trump’s postponement of China tariffs was discussed on CNBC as a reason for the bounce today.  The problem with that analysis is that the announcement came well before futures made a strong move higher.  Futures made their big move at 0830 on the CPI news.  That was odd to me, and it shows once again, I’m not as smart as I think I am. While the basic CPI data was better than expected, the Core CPI (excluding food and energy) was worse on a month-over-month and year-over-year basis. Core CPI was up 3.1% when compared to a year ago. (That stat was 2.9% last month.) Clearly this is going in the wrong direction! The market was up on that news? The pundits said it’s good news? Now, there is nearly a 100% belief by market participants that the Fed will reduce rates in September? – It seems to me, that will not happen if the stats keep going the wrong way.
 
There were some technical concerns.
-Bollinger Bands were signaling overbought today.
-Today, Tuesday, was a statistically significant up-day. That just means that the price-volume move exceeded my statistical parameters. Statistics show that a statistically-significant, up-day is followed by a down-day about 60% of the time. Tops almost always occur on Statistically-significant, up-days, but not all statistically-significant, up-days occur at tops. Today could be a short-term top, but there was only one top-indicator that was bearish (Bollinger Bands) and that’s not enough to signal a top.
 
It looks like investors have given the all-clear sign, but I am leery. I may add a little to my stock holdings to bring my stock portfolio up to 50% invested in stocks (fully invested for me), Wednesday. We’ll see.   
 
S&P 500 is up 3.3% since I cut stock holdings on the big down-day last week. I hate being wrong even if I am just following indicators!
 
BOTTOM LINE
I’m cautiously 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
 
TUESDAY MARKET INTERNALS (NYSE DATA)
My basket of Market Internals improved to BUY.
(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 40% 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.