“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
“Faced with a combination of record speculative extremes
and deteriorating speculative conditions, investors may want to remember that
the best time to panic is before everyone else does.” – John Hussman, Phd.
JOBLESS CLAIMS (Yahoo Finance)
“Despite the second straight weekly decline reported by
the Labor Department on Thursday, claims are hovering near a five-month high.
Job cuts have been reported in the technology and housing sectors amid fears of
a recession as the Federal Reserve aggressively tightens monetary policy to
fight inflation... Initial claims for state unemployment benefits fell 2,000 to
a seasonally adjusted 229,000 for the week ended June 18...” Story at...
https://finance.yahoo.com/news/wrapup-1-u-weekly-jobless-140533243.html
S&P GLOBAL COMPOSITE PMI – US ECONOMY SLOWS SHARPLY (S&P
Global)
“The headline Flash US PMI Composite Output Index
registered 51.2 in June, down from 53.6 in May. The decline in the index reading
signaled further easing in the rate of expansion in business activity to a pace
notably slower than March’s recent peak. Although service providers continued
to indicate a rise in output, it was the weakest increase for five months.
Manufacturers fared worse, with factory production slipping into decline as the
respective seasonally adjusted index fell to a degree only exceeded twice in
the 15-year history of the survey...Inflationary pressures remained marked in
June, as input costs and output charges rose substantially again.” Press
release at...
https://www.pmi.spglobal.com/Public/Home/PressRelease/8fd15c4803fd4399bea8d16e1dc06422
EIA CRUDE INVENTORIES
Not available due to “systems issues.”
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 rose about 0.1% to 3760.
-VIX rose about 0.4% to 29.05.
-The yield on the 10-year Treasury declined to 3.090%.
PULLBACK DATA:
-Drop from Top: 20.9% as of today. 23.6% max. (Avg.= 13%
for non-crash pullbacks)
-Days from Top to Bottom: 118-days. (Avg= 30 days top to
bottom for corrections <10%; 60 days top to bottom for larger, non-crash
pullbacks)
The S&P 500 is 13.9% BELOW its 200-dMA & 6.9%
BELOW its 50-dMA.
*I won’t call the correction over until the S&P 500
makes a new-high; however, we hope to be able to call the bottom when we see
it.
MY TRADING POSITIONS:
SH – Sold. I’ll buy it back on either of the following
conditions: (1) The S&P 500 makes a new low, or (2) There is a
statistically significant up-day i.e., a big daily move higher, probably
exceeding 1.5%.
XLE – Sold.
TODAY’S COMMENT:
Failure to launch? This rally predicted by all of the
talking heads, has been slow to get off the ground, but perhaps today finally
confirmed it. There are plenty of indicators that are suggesting a rally:
(1) Several of the
Fosback Hi/lo Logic short-term indicators are flashing buy signals. That’s because new-highs are near zero – that
usually happens at bottoms. (2) The number of up-days in the last 100-days is
sharply higher. (3) There are a number of oversold readings causing the Bottom
Indicator ensemble to call for a bottom, but not necessarily THE bottom.
As usual, not all of the indicators agree. On the bear
side: (1) My Money Trend indicator is still headed down. (2) Utilities and
Cyclicals suggest investors are preparing for more downside (3) Late-day
action, the time when Pros trade, is bearishly diverging. We also note that Caterpillar
was down nearly 5% today – that’s a sign of recession worry.
I still expect a rally/bounce of some kind, but I am
tired of trying to trade it. I chose
poorly using the XLE as my ETF to trade the current bounce (right trade - wrong ETF). Earlier, I got
caught long when the Fed leaked its intention to hike 75-basis points in the last
bounce. No more counter-trend trades for me.
The long-term trend is down. When
it resumes, I’ll add the SH-ETF (ProShares Short S&P 500).
Today, the daily sum of 20 Indicators declined from -2 to
-4 (a positive number is bullish; negatives are bearish); the 10-day smoothed
sum that smooths the daily fluctuations dropped from -2 to -22. (The trend
direction is more important than the actual number for the 10-day value.) These
numbers sometimes change after I post the blog based on data that comes in
late. Most of these 20 indicators are short-term so they tend to bounce
around a lot.
LONG-TERM INDICATOR: The Long
Term NTSM indicator remained HOLD: SENTIMENT & VIX are bullish; PRICE is
neutral; VOLUME is bearish.
I’m a Bear, but it appears that the bounce/rally has
started. Based on recent rallies, we can
guess that it may last 5-10-Days & show a gain of 5-10%. We’ll see.
BEST ETFs - MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs
(Ranked Daily)
All of the ETFs I track are
below their 120-dMAs so my chart methodology is not valid. XLE has dropped to
third. ETF ranking follows:
(1) XLV (2) XLU (3) XLE
*For additional background on
the ETF ranking system see NTSM Page at…
http://navigatethestockmarket.blogspot.com/p/exchange-traded-funds-etf-ranking.html
BEST DOW STOCKS - TODAY’S MOMENTUM
RANKING OF THE DOW 30 STOCKS (Ranked Daily)
Here’s the revised DOW 30 and
its momentum analysis. The top ranked stock receives 100%. The rest are then
ranked based on their momentum relative to the leading stock.
https://navigatethestockmarket.blogspot.com/p/a-system-for-trading-dow-30-stocks-my_8.html
THURSDAY MARKET INTERNALS
(NYSE DATA)
Market Internals are a decent
trend-following analysis of current market action, but should not be used alone
for short term trading. They are usually right, but they are often late. They are most useful when they diverge from
the Index.
I trade about 15-20% of the total
portfolio using the momentum-based analysis I provide here. If I can see a
definitive bottom, I’ll add a lot more stocks to the portfolio using an S&P
500 ETF.
You may wish to have a higher
or lower % invested in stocks depending on your risk tolerance. 50% is a
conservative position that I consider fully invested for most retirees.
As a general rule, some
suggest that the % of portfolio invested in the stock market should be one’s
age subtracted from 100. So, a
30-year-old person would have 70% of the portfolio in stocks, stock mutual
funds and/or stock ETFs. That’s ok, but
for older investors, I usually don’t recommend keeping less than 50% invested
in stocks (as a fully invested position) since most people need some growth in
the portfolio to keep up with inflation.
