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Friday, April 4, 2025

... Momentum Trading DOW Stocks & ETFs … Stock Market Analysis ...

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CURRENT SUMMARY OF APPROXIMATELY 50 INDICATORS:
Today, of the 50-Indicators I track, 25 gave Bear-signs and 4 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 chart to the left shows a correction in 2001. We note a common correction pattern: a drop from the top; a rebound off the drop and finally, toward the end of the Correction, there is frequently a “waterfall decline.” That’s the straight-down phase of a correction at, or close to, the final correction bottom. This type of decline is typical at the end of bigger corrections. Given the big moves we have seen recently, we must consider that the ongoing correction (already down 17%) is a bigger correction. The key point here is that the ongoing correction may have a lot farther to go.

I looked at 9 corrections since 1970. From the start of the waterfall phase to the end of the correction took, on average, 29 days. The average decline was 24%. That’s not the total decline, that’s just the decline from the start of the Waterfall Phase. It appears that we’re starting the waterfall phase now.

That suggested to me that selling now was still a reasonable action to reduce risk. As a retiree, it is more important to avoid losses than it is to worry about missing some gains if I miss the turn higher.

Once again, the S&P 500 closed at its low. This is not recipe for a bounce back, but a short-term bounce is always possible. There were oversold bullish signs such as Bollinger Bands, RSI, and S&P 500 vs Breadth.

We saw a rare, bearish-sign today; Friday was a 90% down-volume day with negative momentum at the close. From Lowry Research: “A single, isolated 90% Downside Day does not, by itself, have any long-term trend implications, since they often occur at the end of short-term corrections. But, because they show that investors are in a mood to panic, even an isolated 90% Downside Day should be viewed as an important warning that more could follow.“ I think we are beyond the “short-term correction” category so it seems likely we could see another 90% down-volume, day before an end to this correction.

The daily, bull-bear spread of 50-indicators declined and remained bearish at -21 (21 more Bear indicators than Bull indicators) - the 10-dMA of the spread continued down – another bearish sign.

Friday 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. That is not true during waterfall declines as we saw today. The huge down move Thursday was followed by bigger down move Friday.

To hear the breathless commentary from the CNBC talking heads, one might think a 6% down day is un-precedented. During the 34% corona-virus decline in 2020 there was a 12% down-day that was preceded by two down-days higher than 9%. That was a waterfall!

Volume was huge again today, indicating more selling and fear when compared to the prior low. Today was not a bottom – but it might be close, but probably not.

BOTTOM LINE
I am bearish at this point.

ETF - MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs (Ranked Daily) ETF ranking follows:
Since almost all of the ETFs I track are below their 120-dMA the chart is blowing up. The only 2 ETFs with positive momentum are IEFA and XLU.

DOW STOCKS - TODAY’S MOMENTUM RANKING OF THE DOW 30 STOCKS (Ranked Daily)
Since almost all of the Dow 30 stocks are below their 120-dMA so the chart is blowing up. The only 2 Dow stocks with positive momentum are KO (#1) and VZ.

FRIDAY 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 30% stocks, including stock mutual funds and ETFs. 50% invested in stocks is a normal position. (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.

Reducing Stock Holdings

I sold trading positions that I added during this correction. We had a weak Buy-signal several weeks back and I took a couple of trading positions in SPY and XLK. I am regretting the buys, but rather than "should" on myself, I am taking action. I haven't invented a time machine, so to reduce risk, its now or never.

It appears that the markets may be entering a "waterfall" phase in the correction. That's when markets fall nearly straight down. If it is, it is possible markets could fall a lot farther. I am therefore, cutting risk. While I am taking a 10%-15% loss in the positions, they comprise only about a 1-2% loss of the total portfolio.

I am now closer to 30% invested in stocks.

Thursday, April 3, 2025

Jobless Claims ... ISM Services ... Momentum Trading DOW Stocks & ETFs … Stock Market Analysis ...

TODAY’S COMMENT

Thanks, Donald. We needed a flush out, but I would have liked it to be smaller.

The daily, bull-bear spread of 50-indicators declined and remained bearish at -16 (16 more Bear indicators than Bull indicators) - the 10-dMA of the spread continued down – another bearish sign.

Thursday 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. After a 4% down day, I think it is likely that tomorrow will be up, but It doesn’t help that tomorrow is Friday since investors may not want to hold stocks over the weekend.

Bottoms almost always occur on/or near Statistically-significant, down-days, but not all statistically-significant, down-days occur at bottoms. In addition, I have another statistical measure that was triggered. I call that indicator the Panic indicator and today we saw panic. This signal requires some consideration because at tops, the Panic indicator is a sell-signal – at bottoms, it is a buy-signal. While I am treating it as a buy-signal today, it is only one signal and I won’t buy based on this one indicator.

There were other buy-signals (Bollinger Bands; Breadth vs the S&P 500; Money Trend; Smart Money) but only 40% of the ETF’s I track were above their 120-dMA’s. That’s not a number associated with a significant bottom.

More importantly, volume was huge today indicating more selling and fear when compared to the prior low. Today was not a bottom – but it might be close.

A close very near today’s low would probably indicate it’s time to buy, assuming internals are significantly improved. On the other hand, if the S&P 500 falls well below today’s low it suggests more selling. We’ll see...

BOTTOM LINE
I am bearish at this point, but perhaps there will be a bottom soon.

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 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 position. (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.

Wednesday, April 2, 2025

Factory Orders ... Crude Inventories ... Momentum Trading DOW Stocks & ETFs … Stock Market Analysis ...

"Never underestimate the power of stupid people in large groups." – George Carlin

“Two things are infinite: the universe and human stupidity; and I'm not sure about the universe.” - Albert Einstein

“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.

“In his outrage over President Trump’s order to pause federal grants, Sen. Chuck Schumer protested that “virtually any organization, school, state, police office, county, town or community depends on federal grant money to run its day-to-day operations” (“The Spending Freeze Panic,” Review & Outlook, Jan. 30). That statement tells you all you need to know about the bloated federal government Sen. Schumer has helped build over four decades.” - Richard Brown, WSJ Letters to the editor at...
https://www.wsj.com/opinion/what-schumer-has-wrought-senator-new-york-spending-67d950f6?mod=letterstoeditor_article_pos9

FACTORY ORDERS (Breaking the News)
“New orders for manufactured goods in the United States saw a monthly rise of 0.6% or $3.6 billion to land at $594.0 billion in February...” Story at...
https://breakingthenews.net/Article/US-factory-orders-up-by-0.6-in-February/63845819

CRUDE INVENTORIES (EIA)
“U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 6.2 million barrels from the previous week. At 439.8 million barrels, U.S. crude oil inventories are about 4% below the five year average for this time of year.” Report at...
https://ir.eia.gov/wpsr/wpsrsummary.pdf

MARKET REPORT / ANALYSIS AS OF 1PM FRIDAY
-Wednesday the S&P 500 rose about 0.7% to 5671.
-VIX declined about 1% to 21.51.
-The yield on the 10-year Treasury declined to 4.127% (compared to about this time prior market day).

MY TRADING POSITIONS:
XLK added 3/24/2025
SPY added 3/25/2025

CURRENT SUMMARY OF APPROXIMATELY 50 INDICATORS:
Today, of the 50-Indicators I track, 17 gave Bear-signs and 4 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 a little, but remained bearish at -13 (13 more Bear indicators than Bull indicators) - the 10-dMA of the spread continued down – another bearish sign.

S&P 500 futures are down about 2.7% on Trump tariff news as I write today’s blog.

The retracement from the correction-low to the all-time high was about 40% (solid arrow on the above chart). As of today’s close, the retracement from the 28 March low to the 25 March correction high was 44% (another solid arrow on the chart). From a technical standpoint, the second bounce may be over. As I write this, the markets are falling hard due to more tariff talk so that is confirming an end to this bounce.

If the after-market action and futures are correct, S&P 500 is likely to retest the correctio-low on Thursday. When it does, we may have a better idea whether there will be more downside. Unfortunately, tomorrow’s test is not likely to be successful – fear is likely to drive volume thru the roof.

BOTTOM LINE
I am cautiously neutral – I suspect an end to the correction is near, but that’s what I think; indicators may show otherwise.

ETF - MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs (Ranked Daily) ETF ranking follows:

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.)

Tuesday, April 1, 2025

Can Trump be President for a Third Term ... ISM Manufacturing ... Construction Spending ... 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.

“President Donald Trump has often mused, even joked, about seeking a third term, but over the weekend he made his strongest and most serious comments yet on a move that constitutional scholars ABC News spoke with call virtually impossible. ‘I'm not joking...There are methods which you could do it,’ Trump said, including a scenario in which Vice President JD Vance ran at the top of the 2028 ticket with Trump as his running mate, only for Trump to assume the Oval Office after the election...” Story at...
Trump again floats possibly seeking 3rd term. The Constitution bars it, scholars say

“I will end the Ukraine war on the first day of my third term.” – Donald Trump, 1 April 2025.

COULD TRUMP BE PRESIDENT FOR A THIRD TERM? (NTSM)
Not easily. Trump can’t be elected President again. The 22^nd Amendment states: “No person shall be elected to the office of the President more than twice...”
Trump’s suggestion that he could run on a ticket as Vice President and become President for a third term when the elected President resigned doesn’t work; it violates the Constitution’s 12^th amendment. The 12 Amendment states:
“...no person constitutionally ineligible to the office of President shall be eligible to that of Vice-President of the United States.”

Trump could try to amend the Constitution, a near impossibility.

Trump could try an illegal method like the scheme he tried in 2020. If he ran and lost the 2028 election (assuming the Supreme Court allowed him to run), he could put forth phony electors as he did in 2020. If Vice president Vance refused to certify the election (due to confusion over the electors), the House of Representatives could select Trump. That assumes the GOP still controls the House and they remain spineless. Trump tried that trick to overturn the 2020 election, but Mike Pence followed the Constitution and certified the election despite Trump. Trump could have been jailed, but the Democrats delayed prosecution until it was too late. – Meade Stith, NTSM.

ISM MANUFACTURING (ISM)
“The Manufacturing PMI® registered 49 percent in March, 1.3 percentage points lower compared to the 50.3 percent recorded in February. The overall economy continued in expansion for the 59th month after one month of contraction in April 2020. (A Manufacturing PMI® above 42.3 percent, over a period of time, generally indicates an expansion of the overall economy.)” Report from...
https://www.ismworld.org/supply-management-news-and-reports/reports/ism-report-on-business/pmi/march/

CONSTRUCTION SPENDING (RTT News)
“Partly reflecting a jump by spending on residential construction, the Commerce Department released a report on Tuesday showing U.S. construction spending increased by more than expected in the month of February... construction spending climbed by 0.7 percent to an annual rate of $2.196 trillion in February...” Story at...
https://www.rttnews.com/3526000/u-s-construction-spending-climbs-more-than-expected-in-february.aspx

MARKET REPORT / ANALYSIS AS OF 1PM FRIDAY
-Tuesday the S&P 500 rose about 0.4% to 5633.
-VIX declined about 2% to 21.77.
-The yield on the 10-year Treasury declined to 4.161% (compared to about this time prior market day).

MY TRADING POSITIONS:
XLK added 3/24/2025
SPY added 3/25/2025

CURRENT SUMMARY OF APPROXIMATELY 50 INDICATORS:
Today, of the 50-Indicators I track, 17 gave Bear-signs and 3 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 and remained bearish at -14 (14 more Bear indicators than Bull indicators) - the 10-dMA of the spread continued down – another bearish sign.

There were only 3 Bullish indicators out of the 50 or so that I track. This suggests a retest of the prior low is still more likely than not. The S&P 500 has not retested the prior low of 5522 on 13 March. The S&P 500 dropped below the prior low intraday on 31 March and the CNBC crowd mentioned it today. While that may be encouraging, my work relies on a retest at the close, not intraday.

We won’t know anything until the S&P 500 retests the old low. When it does, we may have a better idea whether there will be more downside. The S&P 500 is 1.8% above the prior low.

BOTTOM LINE
I am neutral because I suspect that a retest will be successful. After time has passed, they usually are. If the Trump tariff talk winds down, investors may settle down. If not, I’ll turn more bearish.

ETF - MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs (Ranked Daily) ETF ranking follows:

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.)

Monday, March 31, 2025

Momentum Trading DOW Stocks & ETFs … Stock Market Analysis ...

TODAY’S COMMENT
The daily, bull-bear spread of 50-indicators declined and remained bearish at -13 (13 more Bear indicators than Bull indicators) - the 10-dMA of the spread reversed down – another bearish sign.

A retest of the low of 5522 looks likely now. That is only about a 1.5% decline from today’s close. As of today, the drop from the all-time high is 8.7% and the correction, top to bottom has lasted about 3 weeks, but a retest soon would push the total to around a month and a half. The average correction under 10% lasts about a month. For bigger corrections, the average from top to bottom is around 2-1/2 months.

The low in this correction was about two weeks ago. In 2018, it took more than a month to retest the prior low.

We won’t know anything until the S&P 500 retests the old low. When it does, we may have a better idea whether there will be more downside.

BOTTOM LINE
I am neutral because I suspect that a retest will be successful. After time has passed, they usually are. If the Trump tariff talk winds down, investors may settle down. If not, I’ll turn more bearish.

ETF - MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs (Ranked Daily) ETF ranking follows:

DOW STOCKS - TODAY’S MOMENTUM RANKING OF THE DOW 30 STOCKS (Ranked Daily)

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.)

Friday, March 28, 2025

PCE ... Momentum Trading DOW Stocks & ETFs … Stock Market Analysis ...

My competition...

TODAY’S COMMENT
Breadth crashed today and down goes Frazier, down goes Frazier...no, but the indicators fell as fast as Frazier. The daily, bull-bear spread of 50-indicators fell sharply and turned bearish at -12 (12 more Bear indicators than Bull indicators). I can’t recall ever seeing such a big reversal in my indicators, although the 10-dMA of the spread is still moving higher - bullish sign.

Looks like investors made up their minds. A retest of the low of 5522 looks likely now. That is only about a 1% decline from today’s close. As of today, the drop from the all-time high is 9.2%.

We won’t know anything until the S&P 500 retests the old low. When it does, we may have a better idea whether there will be more downside.

BOTTOM LINE
I am neutral.

ETF - MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs (Ranked Daily) ETF ranking follows:

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