Sentiment ... Trump Tariffs ... 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.
 
SUPREME COURT SKEPTICAL ON BANNING COUNSELING ON GENDER CONVERSION THERAPY (WSJ-Excerpt)
“Supreme Court justices voiced skepticism Tuesday that states can ban counseling that aims to change a young patient’s sexual orientation or gender identity... Justice Samuel Alito signaled he agreed, saying the Colorado law “looks like blatant viewpoint discrimination.”  Justice Neil Gorsuch, another of the court’s conservatives, raised concerns that a law like Colorado’s might have prohibited therapists from affirming a gay patient’s sexual orientation during the 1970s, when medical professionals considered homosexuality to be a form of mental illness. And Justice Amy Coney Barrett pressed the state on its evidence to support its position that conversion therapy was harmful for minor patients.” Story at...
https://www.wsj.com/us-news/law/supreme-court-questions-state-bans-on-conversion-therapy-de97040c?gaa_at=eafs&gaa_n=ASWzDAjTctS4xAV0wvPxl7MXZsCybSzpDdQPDhrbidtveJ3HuN5o-YxCa6MURnSPOfk%3D&gaa_ts=68e946c0&gaa_sig=EZ4JI5hceWAtCMtTERZXB3qvjhrlZ6OOlWpTMTSUBY5Bg3FTCyDePH2MV7KO2rZ1lFY4goA_t3Txo-DlreRfeQ%3D%3D
My cmt: The Supreme Court’s conservatives aren’t as predictable as some think. They are tasked with interpreting the Constitution and sometimes, as Justice Scalia stated years ago, those interpretations go against the personal beliefs of the Justices. For example, Scalia said he abhorred flag-burning, but he affirmed the right of protestors to burn a flag under free-speech protections.   
 
UNIV MICHIGAN SENTIMENT (Univ of Michigan)
“Consumer sentiment moved sideways this month. At 55 index points, sentiment is virtually unchanged from September...  Overall, consumers perceive very few changes in the outlook for the economy from last month. Pocketbook issues like high prices and weakening job prospects remain at the forefront of consumers’ minds. At this time, consumers do not expect meaningful improvement in these factors. Meanwhile, interviews reveal little evidence that the ongoing federal government shutdown has moved consumers’ views of the economy thus far.” Report at... 
https://www.sca.isr.umich.edu/
 
TRUMP THREATS TANK THE MARKETS (CNBC)
“President Donald Trump on Friday threatened to slap a “massive increase of Tariffs” on Chinese products imported into the United States to “financially counter” new export controls that China imposed on rare earths from that country.” Story at...
https://www.cnbc.com/2025/10/10/trump-china-tariffs-rare-earths.html
my cmt: The latest is that Trump says 100% tariffs go on Chinese imports on 1 November. Here we go again – it’s trade war time.
 
MARKET REPORT / ANALYSIS
-Friday the S&P 500 fell about 2.7% to 6753.
-VIX rose about 32% to 21.66.
-The yield on the 10-year Treasury declined to 4.059% (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, 20 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 from -3 to -13 (13 more Bear indicators than Bull indicators), and remained a Neutral indication. I consider +5 to -5 the neutral zone. The 10-dMA curve of the spread smooths daily fluctuations; it reversed down – a Bearsh sign.
 
Tom Lee on CNBC this afternoon said that the move in the VIX today was the 51^st highest ever and that put it in the top 1% of all time daily moves.  He said this will be a buying opportunity. Big jumps in VIX usually signal a good interim bottom, but this may not be the bottom yet.
 
I commented yesterday that one of my more esoteric indicators calculates the standard deviation of daily moves in the S&P 500.  When those moves become too similar (usually a very calm market) it flashes a top-warning because standard deviation is small.  That’s what happened Thursday.
 
Today, Friday, we saw the inverse of this indicator.  When the standard-deviation jumps high enough, it becomes the “Panic Indicator.” The issue with the panic indicator is that it can signal a top or bottom. It is a bottom indicator when the markets have been in decline and the big move in standard deviation signals a flush out of weak hands.  That was the case back on 1 August when the Panic Indicator was activated 4-days after the top. That turned out to be a buying opportunity, although I didn’t believe it at the time. The Panic Indicator is a top-indicator when the big move comes at or near a top especially when there is a negative surprise. I think today’s move would qualify as a top-indicator; it is only 2-days after the top and there were a lot of other signs too.  
 
Friday there was a Hindenburg Omen. It is a negative indicator in my 50-indicator ensemble.
“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, but there were plenty of other confirming indicators with the indicator spread falling from -3 to -13. Still, there were some hopeful signs.
 
Bollinger Bands were oversold suggesting a possible bottom to some.  RSI was not oversold and I use these signals together. RSI is close to oversold, but not there yet. I will ignore the Bollinger Band signal for now, although it is included in the 50-Indicator Spread charted above.
 
Friday the S&P 500 broke thru its lower trend line, but it did close 0.3% above its 50-dMA. The 50-day is a good line of support. This time, I don’t think it will hold.
 
Friday was a statistically significant, down-day. That just means that the price-volume move exceeded my statistical parameters. Statistics show that a statistically-significant, down-day is followed by an up-day about 60% of the time. After a 2.7% down day, I think it is likely that Monday will be up, but that’s not clear. Investors may worry over the weekend and sell more on Monday. That is often the case.
 
Based on breadth at the all-time high we saw Wednesday, the most likely correction outcome would be for a decline not greater than 10%.
 
BOTTOM LINE
I am Bearish, but is not time to panic. The S&P 500 has fallen 3%. If the correction follows prior trends, it is not likely to fall more than 7% further. It is hard to time a small <10% correction so I will sit tight for now. There are still 7 Bull-indicators.  If that number were to fall to zero, I would have to reconsider. As a retiree, I have been cautious at 50% invested in stocks. I have cash available and I will be a stock buyer if I can identify a bottom.
 
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 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 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.