PCE Inflation ... 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.
 
NO RED FLAGS RAISED (NBC News)
“More than seven years before Robin Westman opened fire on a Catholic school as Mass was underway, killing two children and injuring 17 more worshippers, police were called to a townhouse in the Twin Cities suburb where she lived with her mother. The heavily redacted police report NBC News obtained from the police department in Eagan, Minnesota, is dated Jan. 26, 2018, and it includes a two-word description explaining why an officer was dispatched to that address: mental health... Minnesota has a red flag law that went into effect in January 2024, allowing family members and others to petition the courts to have guns removed from a person they believe poses a threat to themselves or the community.”
https://www.nbcnews.com/news/us-news/investigators-say-no-red-flags-raised-minneapolis-church-shooter-rcna227856
My cmt: WTF?! They made a mental health call, but no one ever tried to place him on a no-gun list? The law didn’t exist when police made the mental health check. I guess he slipped thru the cracks.
 
VIRGINIA’S RED FLAG LAW
Virginia's "red flag" law, officially known as the Emergency Substantial Risk Order (ESRO) law, restricts firearm ownership by allowing courts to issue an order for the temporary removal of firearms from an individual deemed by a court to be a substantial risk to themselves or others. 
 
“Virginia’s Emergency Substantial Risk Order (ESRO) law, commonly known as a Red Flag law, prevents individuals who show signs of being a threat to themselves or others from purchasing, possessing, or transporting any kind of firearm. ESROs also provide necessary procedural safeguards to ensure that no firearm is removed without due process, while ensuring that gun tragedies are not repeated. Fairfax County Police Domestic Violence Detective Amanda Paris says that the Red Flag Law is a great tool to help keep the community safe. “Not only does it give time for the person on the order to go ahead and seek the treatment and the help that they need, but it also allows the community to feel safer by having those weapons temporarily removed... [In Virginia, anyone can request an emergency order.] To request an ESRO, call the Police non-emergency line at 703-691-2131. If there is an immediate danger, call or text 9-1-1.” From...
https://www.fairfaxcounty.gov/news/red-flag-law
My cmt: Minnesota’s law is similar (passed in 2023), but it didn’t work in Minneapolis – no one reported Robin (Robert) Westman. He/she bought several weapons legally in August, shortly before he/she murdered 2 children and wounded many others in a church.
 
PCE / CORE PCE (CNBC)
“The personal consumption expenditures price index showed that core inflation, which excludes food and energy costs, ran at a 2.9% seasonally adjusted annual rate... On a monthly basis, the core PCE index increased 0.3%, also in line with expectations. The all-items index showed the annual rate at 2.6% and the monthly gain at 0.2%, also hitting the consensus outlook.” Story at...
https://www.cnbc.com/2025/08/29/pce-inflation-report-july-2025.html
 
CHICAGO PMI (Advisor Perspectives)
“The Chicago Purchasing Managers’ Index (Chicago Business Barometer) slowed in August, reversing most of the gains seen in July. The index fell 5.6 points to 41.5, the largest monthly decline since December 2023. The latest reading marked the 21st consecutive month of contraction for the index and was below the forecast of 46.6.” Commentary, charts and analysis at...
https://www.advisorperspectives.com/dshort/updates/2025/08/29/chicago-pmi-contracts-for-21st-consecutive-month
 
MARKET REPORT / ANALYSIS
-Friday the S&P 500 declined about 0.6% to 6460.
-VIX rose about 6% to 15.36.
-The yield on the 10-year Treasury rose to 4.232% (compared to about this time prior market day).
 
MY TRADING POSITIONS:
SPY – Added 8/26/2025
XLK – Added 8/26/2025
 
CURRENT SUMMARY OF APPROXIMATELY 50 INDICATORS:
Today, of the 50-Indicators I track, 6 gave Bear-signs and 16 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 from +10 to +4 (4 more Bull indicators than Bear indicators) and is now giving a Neutral indication. I consider +5 to -5 the neutral zone. The 10-dMA curve of the spread continued down – a bearish sign.
 
Indicators dropped to a Neutral position, but there are still 13 Bull indicators so a major crash is not indicated now. It could always happen – PEs are elevated/sentiment is high – but indicators don’t suggest it yet.
 
The biggest concern is that all of the ETFs that I track for momentum purposes are above their respective 120-dMAs.  That signals a top, but declines following the signal are often small, and the signal can be early. There are encouraging signs. A couple of important ones:
We note that the S&P 500 has not dropped below its lower trendline and it is 2.3% above its 50-dMA; the Fosback, 10-dMA Hi/Lo Logic Index is well to the bull-side; Breadth readings are good; the McClellan Oscillator is positive.
 
Regarding the McClellan Oscillator: “The McClellan Oscillator offers many types of structures for interpretation, but there are two main ones. First, when the Oscillator is positive, it generally portrays money coming into the market; conversely, when it is negative, it reflects money leaving the market. Second, when the Oscillator reaches extreme readings, it can reflect an overbought or oversold condition.” – From McClellan Financial Publications at...
https://www.mcoscillator.com/learning_center/kb/mcclellan_oscillator/the_mcclellan_oscillator_summation_index/
 
The most likely interpretation is that this decline over the last 5-days or so (the Index is now slightly below where it was 5-days ago) may just be a return to the lower trendline.
 
BOTTOM LINE
I remain cautiously bullish to neutral.
 
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 remained 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 50% 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.