“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
“Price-to-earnings ratios tell you if a stock is overvalued or undervalued. A common yardstick, the cyclically adjusted price-to-earnings ratio, or CAPE ratio, stands at 39.65 for the S&P 500. The last time – indeed, the only time – it ranged that high before was at the peak of the dot-com bubble, in 1999-2000. The CAPE ratio also spiked in 1929, just before the Great Depression...
...’Right now, I’m telling clients to shore up their cash," said Zaneilia Harris, a certified financial planner in Washington, DC. "Just in case something is needed, you’re not pulling from your portfolio when it’s down.’ Younger investors and retirement savers might consider building some cash reserves, Harris said, even if it’s only a small percentage of their investable dollars. Should stocks fall, anyone with cash will have an opportunity to buy shares at a discount.” Story at...
The stock market may be in an AI bubble. Is it time to hoard cash?
My cmt: The general answer to the question was, “No, investors shouldn’t try to time the market.” While the average investor may not be able to do it. I’ll sell high and buy low. NTSM is not your average investor. I have no intention of hanging around thru a major downturn
“The Federal Reserve on Wednesday approved its second straight interest rate cut, though Chair Jerome Powell rattled markets when he threw doubt on whether another reduction is coming in December. By a 10-2 vote, the central bank’s Federal Open Market Committee lowered its benchmark overnight borrowing rate to a range of 3.75%-4%. In addition to the rate move, the Fed announced that it would be ending the reduction of its asset purchases – a process known as quantitative tightening – on Dec 1.” Story at...
https://www.cnbc.com/2025/10/29/fed-rate-decision-october-2025.html
“U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 6.9 million barrels from the previous week. At 416.0 million barrels, U.S. crude oil inventories are about 6% below the five year average for this time of year.” Report at...
https://ir.eia.gov/wpsr/wpsrsummary.pdf
-Wednesday the S&P 500 was essentially unchanged at 6891.
-VIX rose about 3% to 16.92. (Are the Options Players getting worried?)
-The yield on the 10-year Treasury rose to 4.076% (compared to about this time prior market day).
SPY – Added 8/26/2025
XLK – Added 8/26/2025
Today, of the 50-Indicators I track, 10 gave Bear-signs and 15 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 markets didn’t like Fed Chair Powell’s remarks after the official rate cut announcement. Presumably, it was his comments regarding another rate cut in December. Powell said, “In the committee’s discussions at this meeting, there were strongly differing views about how to proceed in December,”
-Despite the S&P 500 rising by 0.23% to a new all-time high, nearly 80% of stocks in the index declined.
-Data from Bespoke Investment Group confirmed that the advance/decline ratio for Tuesday was the worst in history for an "up" day in the S&P 500. – from Yahoo Finance at...
https://finance.yahoo.com/news/p-500-hits-6-900-071335263.html
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If you don’t own Nvidia are you missing its advance? Probably not. NVDA is 15% of the XLK ETF and 8% of the S&P 500.
-The S&P 500 is 12.9% greater than its 200-dMA. The 10-15% zone is where we often see weakness in the markets and 12% is my sell point for this indicator (although we never act on just one indicator.)
-Wednesday there was a Bearish Outside Reversal.
“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.
My rule is that this signal remains in place for 10-days or until the high of the Outside reversal Day is exceeded.
-Wednesday 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; however, they do tend to give a good signal if there is a cluster of Omens. No cluster yet.
Indicators have raised a concern so I’m neutral in a Hold pattern. The Index is stretched above its 200-dMA. I expect a top soon. Then we’ll also get a warning about how extensive a pullback may be. If today was a top, we can expect less than a 10% retreat.
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
For more details, see NTSM Page at…
https://navigatethestockmarket.blogspot.com/p/a-system-for-trading-dow-30-stocks-my_8.html
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.
