“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 (YahooFinance)
“First-time filings for unemployment insurance in the
U.S. totaled
231,000 for the week ended June 25, falling slightly from the prior
week...claims remain only slightly above pre-pandemic levels.” Story at...
https://finance.yahoo.com/news/jobless-claims-june-30-2022-123546658.html
PERSONAL INCOME / SPENDING (Nasdaq)
“Personal income in the U.S. increased in line with
economist estimates in the month of May, according to a report released by the
Commerce Department on Thursday. The report showed personal spending rose by
0.5 percent in May... personal spending edged up by 0.2 percent in May after
climbing by...0.6 percent in April.” Story at...
https://www.nasdaq.com/articles/u.s.-personal-income-increases-0.5-in-may-in-line-with-estimates
PCE PRICES (CNN Business)
“The monthly Personal Consumption Expenditures price
index increased by 6.3% for the year ended in May, the Commerce Department
reported Thursday. That matches April’s reading and suggests that price hikes
have taken a breather since hitting a 40-year-high of 6.6% in March. The core PCE inflation measure,
which strips out volatile food and energy costs, rose 4.7% from the year
before, down from 4.9% in April.” Story at...
https://www.cnn.com/2022/06/30/economy/pce-inflation-prices-may/index.html
CHICAGO PMI (MarketWatch)
“The Chicago Business Barometer, also known as the
Chicago PMI, fell to 56 in June from 60.3 in the prior month... So far this month,
the regional manufacturing surveys released by Federal Reserve banks have shown
a deterioration in business sentiment even as measures of activity have been
positive.” Story at...
https://www.marketwatch.com/story/chicago-pmi-down-sharply-in-june-11656597569
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 fell about 0.9% to 3785.
-VIX rose about 2% to 28.71.
-The yield on the 10-year Treasury was 3.020%.
PULLBACK DATA:
-Drop from Top: 21.1% as of today. 23.6% max.
-Days since Top: 123-days.
The S&P 500 is 13.8% BELOW its 200-dMA & 5.8%
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:
None. The expected bounce lost momentum.
TODAY’S COMMENT:
The following chart is configured so that if the S&P
500 minus XLU spread (red line) is below 0%, Utilities are out performing the
S&P 500 Index. That is not a good sign. Worse, the bearish divergence is
rapidly headed the wrong way, as indicated by the steep slope down.
XLI (Cyclical Industrials) are also bearishly diverging from the Index. VIX slipped from bullish to a Neutral reading – that’s not bearish, but it is headed in the wrong direction. The 5-10-20 Timer (a moving average crossover indicator) is also still bearish. On the other hand, until today, most of my other indicators were bullish. Today, it’s sort of a mixed bag.
Divergence can give clues to future movements in price.
Crossover indicators and most others are trend following. The point is to remember that no indicator is
perfect and they don’t foretell the future - It’s just probability.
The first day of the month is an inflow day for mutual
funds and retirement accounts. It is
usually up, so I’ll watch for a late-day move higher. If markets can’t finish higher, that would be
another bearish sign. (Futures are down as I write this so, we’ll see.)
Today, the daily sum of 20 Indicators dropped from +10 to
+4 (a positive number is bullish; negatives are bearish); the 10-day smoothed
sum that smooths the daily fluctuations improved from +25 to +35. (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 BUY: SENTIMENT, VOLUME, & PRICE are bullish; VIX
is Neutral. I don’t consider this a good time to be a buyer. Markets have
still not bottomed, and if we do have a recession, markets are likely to fall a
lot more.
I’m a Bear, longer-term, but the indicators are not very bearish.
The ISM Manufacturing Index will be released tomorrow and that may move the
markets if it shows manufacturing is appreciably slowing.
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. Top four ETF
ranking follows:
(1) XLU (2)
XLV (3) XLE (4) IBB
*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.
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)
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.
My stock-allocation in the
portfolio is now roughly 30% invested in stocks.
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.
