ISM Non-Manufacturing ... 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.
“The NAAIM [National Association of Active Investment
Managers] Exposure Index reached a high of 99.3 on July 2, and has been backing
off since then even though the SP500 is going higher. This condition has
historically been a problem for the stock market.” – Tom McClellan, McClellan
Financial Publications. Commentary at...
https://www.mcoscillator.com/
ISM NON-MANUFACTURING PMI (ISM)
“In July, the Services PMI® registered 50.1 percent,
0.7 percentage point lower than the June figure of 50.8 percent but in
expansion territory for the second month in a row... “July’s PMI® level
continues to reflect slow growth, and survey respondents indicated that
seasonal and weather factors had negative impacts on business. The Employment
Index’s continued contraction and faster expansion of the Prices Index are
worrisome developments.” Report at...
https://www.ismworld.org/supply-management-news-and-reports/reports/ism-report-on-business/services/july/
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 declined about 0.5% to 6299.
-VIX rose about 2% to 17.92.
-The yield on the 10-year Treasury rose to 4.204%
(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, 16 gave Bear-signs and 7 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 declined to
a bearish -9 (9 more Bear indicators than Bull indicators). I consider +5 to -5
the neutral zone. The 10-dMA curve of the spread continued falling – a bearish
sign.
Are we worried? As we look at the Summary of 50 Indicator
Spead chart above, there is a clear divergence between the falling indicators
in red and the S&P 500 in black. It’s a worrisome sign.
Internals Tuesday weren’t bad, but we aren’t getting any
bottom signals suggesting an end to weakness, either, so it’s weakness is
likely to continue.
Looking at top/Bottom signals, we don’t see any. Those indicators aimed at identifying Bottoms
and Tops (chart below) are currently neutral. A reading of +5 signals a Bottom;
-5 signals a Top. We did see a Top-Signal
on 25 July, the day before the most recent top, but no bottom signal yet.
If the downturn turns out to be very short-lived, we probably
won’t see a bottom signal, but I would expect at least a few indicators will be
sending a bullish signal at a bottom.
Tuesday, unchanged volume was very high. As I’ve often
said, many believe that this indicator suggests investor confusion at market
turning points. Are markets turning back up? Perhaps the best we can say is
that investors are confused. “High-unchanged-volume” is not one of my
indicators because it is often wrong.
I won’t change my invested position unless indicators
reverse higher.
Indicators suggested a correction greater than 10% when
the S&P 500 made its all-time high a week ago. Unless there is a recession,
a correction of 20% or more is not likely.
If we do see a correction, and of course there is no
guarantee we will, some levels of support follow: The S&P 500 was 2.5%
above the 50-dMA and 6.7% above the 200-dMA.
BOTTOM LINE
Until proven otherwise, I’m bearish.
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 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 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.
