Monday, August 31, 2026

Chicago PMI … Dallas Fed Manufacturing … 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.
 
“There’s a lot of exuberance out there,” Dimon continued. “But it was in 1972, 1986, 2000, 2007. That doesn’t give me comfort.” – Jamie Dimon
  
THE SOCIALISM WE ALREADY HAVE (WSJ-Excerpt)
“Sorry, youngsters, ask Scott Bessent: We’ve already run out of other people’s money…
…An American baby born today owes $376,000 in federal debt and unfunded entitlement liabilities, assuming the burden is evenly distributed. Of course, it isn’t. We oldsters plan on checking out before the bill comes due…
…Bernie Sanders has an answer: Make billionaires pay. Unfortunately, the wealth of billionaires consists of property rights, the value of which disappears if confiscated. The Scandinavian societies young socialists idealize actually protect private wealth. Their middle-class taxpayers pay taxes willingly because the benefits they get in return they believe to be efficiently and fairly delivered. These are small, homogenous countries with “high social trust,” which, their experts are first to remind you, the U.S. isn’t.” - Holman W. Jenkins Jr., WSJ editorial board of The Wall Street Journal, writes the twice-weekly “Business World” column. Opinion at…
 
NATIONAL DEBT CRISIS (WSJ-Excerpt)
“For decades, deficit hawks have argued that we can’t go on this way indefinitely. It turns out that “indefinitely” has lasted longer than we expected—another confirmation of Adam Smith’s quip that “there is a great deal of ruin in a nation.” But the recent tremors in global markets suggest that we are dangerously close to the end of the extended grace period we have enjoyed…
…In 2001, after four straight years of budget surpluses, the CBO released a 10-year forecast projecting that the national debt would be eliminated by 2009. This didn’t happen. Combined with slower-than-expected economic growth, the Bush tax cuts reduced income tax receipts from a projected $1.8 trillion in 2011 to $1.2 trillion. During the same period, outlays to pay for long wars in the Middle East and programs to soften the blow of the Great Recession increased discretionary spending in 2011 from a projected $900 billion to $1.3 trillion… 
…It will be difficult to stanch the flow of red ink, but the alternative—an ever-growing debt that saps our economic vitality—would be far worse.” - William A. Galston, the weekly Politics & Ideas column in The Wall Street Journal. Opinion at…
My cmt: We’ll pay $1-Trillion this fiscal year just to pay the interest on the National Debt, 19% of the total federal budget. Holy cr@p!
Have you heard one politician address this issue with proposed solutions?
 
DISASTER ON WALL STREET (Motley Fool)
“The stock market has reached a level observed only three times since January 1871…
…The beauty of the Shiller P/E Ratio is that it's based on average inflation-adjusted earnings over the previous 10 years, rather than trailing 12-month earnings, as with the traditional P/E ratio. Encompassing a decade's worth of earnings history ensures that recessions can't skew the Shiller P/E or adversely affect its usefulness.

…The S&P 500's Shiller P/E Ratio has averaged 17.4 when backtested to January 1871. As of the closing bell on Aug. 24, the Shiller P/E clocked in at 41.84, approximately 140% above its nearly 156-year average…After the Shiller P/E hit its all-time high, the dot-com bubble erased 49% and 78% of the S&P 500's and Nasdaq Composite's values, respectively…To be clear, a historically high CAPE Ratio doesn't guarantee that stocks will plunge, nor can it pinpoint when the music will stop on Wall Street. But based solely on what history has shown us, premium stock valuations aren't sustainable over long periods.” Story at…
 
CHICAGO PMI (IndexBox)
“The Chicago Purchasing Managers Index has posted a fresh reading that signals a downturn in regional manufacturing activity. The index now stands at 47.1, a level that falls beneath the 50-point mark separating expansion from contraction. This outcome diverges markedly from what economists had projected.” Story at…
 
DALLAS FED MANUFACTURING (Dallas Federal Reserve) “
Texas manufacturing output growth accelerated in August, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, increased six points to 16.1…Perceptions of broader business conditions improved in August…Price pressures were relatively stable but remained markedly elevated while wage pressures eased in August… Expectations are for increased manufacturing activity six months from now.” Report at…
 
QUICK MARKET SUMMARY
-Monday the S&P 500 declined about 0.3% to 7686.
-VIX rose about 3% to 14.91.
-The yield on the 10-year Treasury rose to 4.78% (compared to about this time prior market day).
 
MY TRADING POSITIONS
QLD – Added 5/28/2026
NVDA – Added 12/1/2025, 2/6/2026 & 8/3/2026
XLK – Added 6/5/2026
 
CURRENT SUMMARY OF APPROXIMATELY 50 INDICATORS:
At the close today, of the 50-Indicators I track, 14 gave Bear-signs and 8 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 was unchanged at -6 (6 more Bear indicators than Bull indicators), a slightly BEARISH 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.
 
Unchanged volume was very high today (Monday) suggesting confusion among investors. Some think this represents a reversal. Since the S&P 500 chart is close to flat recently it is hard to say which way a reversal would go. Since this signal is often wrong, it is not one of my indicators. However, RSI is down, suggesting a reversal is more likely to be higher if a reversal were to occur.
 
The Bollinger Band Squeeze remains.
“A Bollinger Band Squeeze is a technical analysis pattern that happens when the upper and lower [Bollinger] bands come close together, signaling a period of low market volatility that often precedes an explosive price breakout…To determine breakout direction, Bollinger suggests that it is necessary to look to other indicators…
If there is a positive divergence—that is, if indicators are heading upward while price is heading down or neutral—it is a bullish sign. For further confirmation, look for volume to build on up days. On the other hand, if price is moving higher but the indicators are showing negative divergence, look for a downside breakout—especially if there have been increasing volume spikes on down days. Another indication of breakout direction is the way the bands move on expansion. When a powerful trend is born, the resulting explosive volatility increase is often so great that the lower band will turn downward in an upside break, or the upper band will turn higher in a downside breakout.” - Investopedia.
 
My indicators do not mirror the ones that Bollinger recommended. The only one we have in common was RSI. RSI is not giving a strong signal either way, but it is closer to a buy than a sell. Overall, my indicators have been in a holding pattern so it is mostly guesswork which way a squeeze breakout will go. I’m guessing higher.
 
BOTTOM LINE
I’m neutral until conditions change.
 
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…
 
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…
 
MONDAY 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 invested position is about 60% 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.
  

Posted by at