ISM Non-Manufacturing … New Home Sales … 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.
 
“Never, never, never, believe any war will be smooth and easy, or that anyone who embarks on that strange voyage can measure the tides and hurricanes he will encounter. The Statesman who yields to war fever . . . is no longer the master of policy but the slave of unforeseeable and uncontrollable events.” - Winston Churchill.
 
“We’re not looking for a fight, but Iran also cannot be allowed to block innocent countries and their goods from an international waterway. Iran’s plan, a form of international extortion, is unacceptable.” – Pete Hegseth, Secretary of Defense (War).
 
 
RECESSION COMING IN 2026? (The Street)
“In an interview with Business Insider, Shilling [legendary economist Gary Shilling] said a U.S. recession is almost inevitable by year-end, and that the S&P 500 could fall as much as 30% before 2026 is over. He sees converging conditions — a frozen housing market, weakening consumer spending, and stock valuations stretched to levels not seen since the dot-com era — without a plausible escape hatch… ‘The only things that could prevent a downturn,’ Shilling told Business Insider, ‘are a burst of fiscal stimulus or continued strength of the U.S. consumer, both of which he considers unlikely.” - Gary Shilling, American financial analyst and a member of the Nihon Keizai Shimbun Board of Economists. Story at…
https://www.google.com/search?q=gary+shillling&rlz=1C1VDKB_enUS1188US1189&oq=gary+shillling&gs_lcrp=EgZjaHJvbWUyBggAEEUYOTIPCAEQLhgNGIMBGLEDGIAEMggIAhAAGAMYDTIICAMQABgDGA0yCQgEEAAYDRiABDIJCAUQABgNGIAEMgkIBhAAGA0YgAQyCQgHEAAYDRiABDIICAgQABgDGA3SAQk3Mzc5ajBqMTWoAgiwAgHxBYYhL_5fM64V&sourceid=chrome&ie=UTF-8
 
BANK OF AMERICA CAUTIOUS (The Street)
“Stocks are setting records, but professional investors are not meaningfully increasing their equity exposure. That gap between price performance and positioning is unusual. It suggests that the most sophisticated market participants are not confident enough to chase the rally, even after it has already happened…BofA also flagged three specific risks that it believes the market is underpricing. The first is narrow rally participation…The second is equity supply-demand dynamics. BofA sees the backdrop worsening, which can make it harder for stocks to keep rising…The third is geopolitical risk.,, BofA's message is not a call to exit the market. It is a call to think more carefully about what is holding the rally up.” Story at…
Bank of America issues blunt warning to Wall Street on stock market
 
ISM NON-MANUFACTURING (Advisor Perspectives)
“The Institute for Supply Management (ISM) released its April Services Purchasing Managers' Index (PMI), with the headline composite index at 53.6. This was lower than the forecast of 53.7 but keeps the index in expansion territory for a 22nd consecutive month.” From…
https://www.advisorperspectives.com/dshort/updates/2026/05/05/ism-services-pmi-april-2026
 
NEW HOME SALES (NAHB)
Constrained supply of existing homes and modest improvement in mortgage rates pushed new home sales higher in March.
Sales of newly built single-family homes rose 7.4% in March…” From…
https://www.nahb.org/news-and-economics/press-releases/2026/05/new-home-sales-rise-supported-by-limited-existing-inventory
 
QUICK MARKET SUMMARY
-Tuesday the S&P 500 rose about 0.8% to 7259.
-VIX declined about 5% to 17.38.
-The yield on the 10-year Treasury declined to 4.426% (compared to about this time prior market day).
 
MY TRADING POSITIONS
SPY – Added 12/1/2025.
NVDA – Added 12/1/2025 & 2/6/2026
“Despite all the bearish noise, Goldman Sachs isn’t backing down on Nvidia (NVDA) stock yet. After another stellar GTC showing, the bank reiterated its $250 price target and maintained a buy rating, underscoring confidence in the AI giant’s tremendous upside from current levels.” Story at…  
Goldman Sachs sends blunt message on Nvidia stock after GTC
 
CURRENT SUMMARY OF APPROXIMATELY 50 INDICATORS:
At the close today, of the 50-Indicators I track, 6 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 daily, bull-bear spread of 50-indicators improved from -4 to +9 (9 more Bear indicators than Bull 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 remained down, a BEARISH sign that is more important than the daily numbers.
 
Yesterday I noted that the indicator spread switched from +5 to -4, a change in spread of -9.  Today the was a change in spread of +13, another big reversal. Where does that leave me? The 10-dMA of the spread (purple line in the above chart) is still falling so I am not yet inclined to add to stock holdings.
 
The S&P 500 made a new high today (Wednesday). 192 issues on the NYSE made a new-high today; that is slightly above the 5-year average.
 
More than 50% of stocks in the S&P 500 were trading above their 200-dMA’s. The 10-dMA of issues advancing on the NYSE was also above 50%. These stats show breadth is ok so we don’t need to worry about a correction >10% anytime soon
 
Today’s action pushed the breadth up to acceptable levels – it was looking worrisome yesterday.
 
I said yesterday, my guess is that markets will retrace about half of their gains. At this point, that call looks weak. The middle east news looks better as the US has escorted a couple of commercial vessels thru the Strait of Hormuz while destroying six Iranian gunboats who were attacking foreign vessels. Since the correction was news driven it is logical that better news can push markets higher. Futures are looking up as I write this.
 
I’d still like to see the indicators turn higher, before getting optimistically bullish.
 
BOTTOM LINE
I am cautiously bullish.
 
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
 
TUESDAY MARKET INTERNALS (NYSE DATA)

My basket of Market Internals improved to 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 55% stocks, including stock mutual funds and ETFs. 50% invested in stocks is a normal, conservative position for a retiree. (80% 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.