Construction Spending … Momentum Trading DOW Stocks & ETFs … Stock Market Analysis
It was another busy day so today’s post is later than usual.
“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.”
“You are living in a world in which the Indiana Hoosiers
are your college football national champions. I’m not sure how to explain how
crazy this is. It’s like going down to the basement and finding the cat singing
opera and folding laundry.” – Jason Gay, Sports Columnist, WSJ.
TRUMP BACKS OFF (Yahoo Finance)
“US stocks spiked on Wednesday after President Trump
announced the US and NATO "formed the framework of a future deal" on Greenland
and called off threatened tariffs on European nations, just days after he
roiled markets with the threats.” Story at…
https://finance.yahoo.com/news/live/stock-market-today-dow-surges-550-points-sp-500-nasdaq-jump-as-trump-backs-off-greenland-tariff-threats-210059834.html
My cmt: Wow! The Art of the Deal – Threaten WW III, but
settle for bases and operational freedom even though the US already had those capabilities.
“Under a little-known Cold War agreement, the United
States already enjoys sweeping military access in Greenland. Right now, the
United States has one base in a very remote corner of the island. But the
agreement allows it to “construct, install, maintain, and operate” military
bases across Greenland, “house personnel” and “control landings, takeoffs,
anchorages, moorings, movements, and operation of ships, aircraft, and
waterborne craft.” Story at…
https://www.nytimes.com/2026/01/07/world/europe/trump-greenland-denmark-us-defense-pact.html
CONSTRUCTION SPENDING (RTT News)
“The Commerce Department said construction spending
climbed by 0.5 percent to an annual rate of $2.175 trillion in October after
falling by 0.6 percent to an annual rate of $2.164 trillion in September.
Economists had expected construction spending to inch up by 0.1 percent.” Story
at…
https://www.rttnews.com/3612212/u-s-construction-spending-climbs-much-more-than-expected-in-october.aspx
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 rose about 1.2% to 6876.
-VIX declined about 16% to 16.90.
-The yield on the 10-year Treasury declined to 4.257%
(compared to about this time prior market day).
MY TRADING POSITIONS
XLK – Added 11/26/2025 & 12/1/2025
SPY – Added 12/1/2025.
NVDA – Added a small position 12/1/2025.
SSO – Added 1/7/2026; Increased the position 1/21/2026
CURRENT SUMMARY OF APPROXIMATELY 50 INDICATORS:
At the close today, of the
50-Indicators I track, 5 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
Trump reversed course again and markets rebounded.
The daily, bull-bear spread of 50-indicators improved
from +4 to +10 (10 more Bull indicators than Bear indicators), a BULLISH
indication. I consider +5 to -5 the
neutral zone. The 10-dMA curve of the spread (purple on the chart above) that
smooths daily fluctuations continued down a bearish sign, although the upward
move of the daily number looks more important.
We still have the bearish rising wedge on the chart. I’ve shown it in red. The top of the rising
wedge on the above chart is around 7,000. We need to see the S&P 500 break
above that level to feel better about markets. That will be an important test.
Tuesday was a statistically significant up-day. That just
means that the price-volume move exceeded my statistical parameters. Statistics
show that a statistically-significant, up-day is followed by a down-day about
60% of the time.
Still, I remain bullish and I added to my SSO position
today. It was too late in the day to post before I added to the position.
BOTTOM LINE
I’m cautiously bullish and fully invested.
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 improved, but remained HOLD.
(My basket of Market Internals is a decent trend-following analysis that is
most useful when it diverges from the Index.)
My invested position is about 65%
stocks, including stock mutual funds and ETFs (although I need to re-calculate
this number). 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 although I don’t trade as much as I used
to. 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.
