ADP Employment ... 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.
 
ADP EMPLOYMENT (ADP)
“Private sector employment increased by 42,000 jobs in October and pay was up 4.5 percent year-over-year according to the October ADP National Employment Report® produced by ADP Research in collaboration with the Stanford Digital Economy Lab ("Stanford Lab").” News at..  
https://mediacenter.adp.com/2025-11-05-ADP-National-Employment-Report-Private-Sector-Employment-Increased-by-42,000-Jobs-in-October-Annual-Pay-was-Up-4-5
 
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 rose about 0.4% to 6796.
-VIX declined about 5% to 18.01.
-The yield on the 10-year Treasury rose to 4.149% (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, 17 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 -9 to -10 (10 more Bear indicators than Bull indicators), a BEARISH indication. I consider +5 to -5 the neutral zone. The 10-dMA curve of the spread (purple on the chart above) smooths daily fluctuations; it continued down, a BEARSH sign.
 
Ruh-Roh... More of the same... Wednesday there was another Hindenburg Omen. That’s Five in the last six days.
“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.
 
As previously noted: 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. Now we have seen 5 in 6 days. Looks like a cluster to me.
 
The Fosback New-high/New-low Logic Index uses a methodology similar to the Hindenburg Omen. Fosback’s indicator is still neutral, but just barely. Even if internals are fairly neutral, Thursday could send the Fosback indicator into “sell” mode. I don’t act on one signal, but I am reminded that this indicator called the Covid Pandemic top (before the 35% bear market) to the day.
 
There are now only 7 Bullish indicators: 4 are momentum indicators and will respond to drops in the S&P 500; 2 are breadth indicators that will respond to declining issues outpacing advancing issues; the last, a Follow-thru Day, would be canceled by a big down-day that meets the test for a Distribution Day. It wouldn’t take much for indicators to suggest reducing stock positions.
 
As noted yesterday, if we do see a correction, I expect it to be less than 10% based on past history... But, if there are no bull indicators, I would be inclined to reduce stock holdings. I don’t think small corrections are correlated to Zero bull-signs. Indicators aren’t there yet so no need to try and predict which way they will go.
 
The S&P 500 is 1.4% below its all-time high; 2% above its 50-dMA; and 11% above its 200-dMA.
 
BOTTOM LINE
I’m neutral, leaning bearish, but I won’t make any portfolio changes at this point - watching indicators.
 
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
 
WEDNESDAY MARKET INTERNALS (NYSE DATA)

My basket of Market Internals remained 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.