Friday, August 22, 2025

Jackson Hole Speech ... 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.
 
US TAKES 10% STAKE IN INTEL (NBC)
“The Trump administration said Friday that it had taken a 10% [valued at roughly $10-billion] stake in Intel, President Donald Trump’s latest extraordinary move to exert federal government control over private business.” Story at...
https://www.nbcnews.com/business/business-news/intel-agrees-us-stake-in-company-how-much-what-to-know-rcna226667
My cmt: It appears that the Government had already given $10-billion to Intel in Chips Act and other funds from the Biden Administration. There was no new money, but Intel has agreed to grant the Government a 10% stake, although the funds had already been committed before the announcement. It is not clear where the shares come from.  Will new shares be issued? If so, it would be dilutive to shareholders.
 
TRUMP TO FIRE FED GOVERNOR LISA COOK (CNBC)
“President Donald Trump said Friday he will fire Federal Reserve Governor Lisa Cook if she does not resign from her position...Federal Housing Finance Agency Director Bill Pulte this week publicly accused Cook of mortgage fraud related to claims that she took two different properties as her primary residence at the same time.”
https://www.cnbc.com/2025/08/22/trump-fire-fed-lisa-cook-powell.html
My cmt: How ironic. Trump ignores due process while he rails against “lawfare” against him by the Democrats.
 
JACKSON HOLE SPEECH EXCERPT (from CNBC)
“...Putting the pieces together, what are the implications for monetary policy? In the near term, risks to inflation are tilted to the upside, and risks to employment to the downside—a challenging situation. When our goals are in tension like this, our framework calls for us to balance both sides of our dual mandate. Our policy rate is now 100 basis points closer to neutral than it was a year ago, and the stability of the unemployment rate and other labor market measures allows us to proceed carefully as we consider changes to our policy stance. Nonetheless, with policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance.” – Jay Powell, Chairman of the Federal  Reserve.
 
JACKSON HOLE SPEECH (CNBC)
“Federal Reserve Chair Jerome Powell on Friday gave a tepid indication of possible interest rate cuts ahead as he noted a high level of uncertainty that is making the job difficult for monetary policymakers...” Story at...
https://www.cnbc.com/2025/08/22/powell-indicates-conditions-may-warrant-interest-rate-cuts-as-fed-proceeds-carefully.html
 
WARNING SHOTS BEFORE A MEANINGFUL PULLBACK (MarketWatch)
“Chris Watling, the CEO, global economist and chief market strategist at Longview Economics, is wary about the signals U.S. equities are giving going into the traditionally dodgy September period... Next, he says signs of froth have continued to build in recent weeks. For example, the percentage of stocks with valuations greater than 10 times enterprise value to sales is over 20%, similar to peaks in 2000 and 2021.. given all the flashing signals noted, he remains what he calls “tactically neutral” on U.S. stocks.” Story at...
Take heed of the latest market wobble. ‘You get warning shots before meaningful pullbacks,’ says this strategist.
 
MARKET REPORT / ANALYSIS
-Friday the S&P 500 rose about 1.5% to 6465.
-VIX fell about 14% to 14.22.
-The yield on the 10-year Treasury declined to 4.256% (compared to about this time prior market day).
 
MY TRADING POSITIONS:
None
 
CURRENT SUMMARY OF APPROXIMATELY 50 INDICATORS:
Today, of the 50-Indicators I track, 6 gave Bear-signs and 18 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.)
TO

daily, bull-bear spread of 50-indicators jumped from -8 to +12 (12 more Bull indicators than Bear indicators) and is now giving a Bullish indication. I consider +5 to -5 the neutral zone. The 10-dMA curve of the spread is solidly rising – a bullish sign. The 10-day did not turn bearish recently so it was the better signal.
 
While Powell’s comments were a [per CNBC] “tepid indication of possible interest rate cuts,” it was enough for the market. I was wrong on this one even though another Fed Governor came out more or less against rate cuts given the current data:
“Cleveland Federal Reserve President Beth Hammack said Friday she would be hesitant about lowering interest rates as long as inflation remains a threat. In a CNBC interview, the policymaker did not share the market’s enthusiasm for a cut, sparked after Chair Jerome Powell’s keynote speech earlier in the morning...” from CNBC at...
https://www.cnbc.com/2025/08/22/cleveland-feds-hammack-casts-doubt-on-interest-rate-cuts-amid-inflation-worries.html
Curious that Fed Governors are not in line with the Fed Chair.
 
Friday was a 90% up-volume day. Slightly more than 90% of all volume on the NYSE was up-volume. While we always like to see a 90% up-volume day, one 90% up-volume day by itself is not evidence of a sustained upside reversal. However, there were plenty of other bullish signs.
Two important ones:
-The S&P 500 bounced off its lower trend line, although the lower trendline is higher than “normal”. Usually, the lower trendline coincides with the 50-dMA.
-Clearly, there was a big, jump higher in indicators and that’s a solidly bullish sign.
But not all the news was good today.
 
Today, Friday, 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. There was also one very reliable indicator warning of a top.
 
As of Thursday, all of the ETFs that I track and chart for momentum purposes are above their respective 120-dMAs.  This indicator almost always correctly identifies tops and bottoms, although the timing can be early.  The most recent signals were: It called a bottom the day before the bottom of the 19% correction in April of 2025 when 100% of the ETFs were below their 120-dMAs. It was 2-weeks early when it warned at the top before a small 3% decline in Oct 2024. It warned the day before the top of a 9% correction in August 2024.
 
The market was bullish today, but we’ll need to be careful that we don’t get sucked into making huge buys at a top.
Should we buy Monday? It would seem so. Let’s see if we get follow-thru buying on Monday.
 
BOTTOM LINE
I’m cautiously bullish. I’ll probably add some stocks Monday to get back to my “fully” invested position of 50% in stocks.
 
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
 
FRIDAY 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.