... 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.
 
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 fell about 1.7% to 6737.
-VIX rose about 14% to 20.
-The yield on the 10-year Treasury rose to 4.121% (compared to about this time prior market day).
 
MY TRADING POSITIONS:
SPY – SOLD 11/7
XLK – SOLD 11/7
 
CURRENT SUMMARY OF APPROXIMATELY 50 INDICATORS:
At the close today, of the 50-Indicators I track, 14 gave Bear-signs and 12 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 +4 to -2 (2 more Bear indicators than Bull indicators), a NEUTRAL 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, but it remains almost flat suggesting a possible reversal to the bullish side.
 
I mentioned yesterday that it would be nice to see the Technology stocks drop to their 50-dMA. I didn’t expect it to happen in less than 24 hours! The S&P 500 finished 0.6% above its 50-dMA as of Thursday’s close; The Technology Sector (XLK) was 0.7% above its 50-dMA. Now we need to figure out if this is a buying opportunity. Thursday’s low was on lower volume than the recent low on 6 November, so it might have been a successful test of the prior low. The trouble is, we don’t know. Buying pressure fell compared to the prior low. My suggestion is to wait and see. A strong bounce followed by further gains would suggest a time to buy.  We could also see more selling.
 
I saw a piece that said the current selling in technology was by Hedge Funds and Wall Street pros. If the average investor joins in the selling, a correction is likely. On the other hand, we might see retail investors buy the dip – no correction.
 
Monday 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. Bottoms almost always occur on/or near Statistically-significant, down-days, but not all statistically-significant, down-days occur at bottoms. Today could be a short-term bottom, but there were only two Bottom Indicators, not enough to send a strong bottom-signal, so I don’t know.
 
The was another Fosback Hi/Low Logic Indicator sell signal today, and another Hindenburg Omen. That’s 8 Omens in 13 days.
 
There is now only a 47% chance of a rate cut at the December meeting according to the CME Group Fed Watch, so the Fed may not be propping up the market.
 
Let’s see what happens in the next day or two.
 
BOTTOM LINE
I’m 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
 
THURSDAY MARKET INTERNALS (NYSE DATA)

My basket of Market Internals remained BUY. (My basket of Market Internals is a decent trend-following analysis that is most useful when it diverges from the Index.) 
 
 
 
 

As of Friday, my 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.