Best DOW Stocks ... Best ETFs … Stock Market Analysis ... Consumer Price Index ... EIA Crude Inventories
“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.
CPI (Yahoo Finance)
“In June, headline
inflation rose 9.1%, the most since November 1981 and well above
estimates for an 8.8% increase in prices....June's figures also likely seal
another 0.75% increase in interest rates from the Federal Reserve at the
conclusion of its July 26-27 policy meeting.” Story at...
https://finance.yahoo.com/news/stock-market-news-live-updates-july-13-2022-114823992.html
Core inflation, excluding Food and energy, rose 5.9%, and
that, too, was higher than estimates.
EIA CRUDE INVENTORIES – Week Ending 8 July (EIA)
“U.S. commercial crude oil inventories (excluding those
in the Strategic Petroleum Reserve) increased by 3.3 million barrels from the
previous week. At 427.1 million barrels, U.S. crude oil inventories are about
5% below the five year average for this time of year.” Report at...
https://ir.eia.gov/wpsr/wpsrsummary.pdf
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 slipped about 0.5% to 3802.
-VIX bucked the trend and declined about 2% to 26.82.
-The yield on the 10-year Treasury dipped to 2.943%.
PULLBACK DATA:
-Drop from Top: 20.7% as of today. 23.6% max.
-Trading Days since Top: 131-days.
The S&P 500 is 13% BELOW its 200-dMA & 3.8% 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:
SH
I added a small short position 7/11. I increased my short position on 7/13.
Calling a top in this market is nearly impossible, so I
am scaling into a position in SH, short the S&P 500 ETF.
TODAY’S COMMENT:
CPI data was worse than expected in both CPI and Core CPI
(excluding Food and Energy). The odds of a 100 basis-point (1%) rate hike at
the next Fed meeting, July 26 & 27, rose to over 40%. A 1% hike would not
be a surprise.
It looks like the S&P 500 will test its prior low of 3667.
Currently, the Index is only about 3% above that low. Surprisingly, there is
some chance that this could be a significant bottom, i.e., the markets could
rally a lot after a successful test. Why?About 85% of stocks are trading below
their 200-dMA; PEs are more reasonable, although whether they are low enough depends
on to whom one is listening; and new-highs have been close to zero this week. It will take
no new-highs to make a bottom, even if it is just a temporary bottom.
All I can do is look at the data when the S&P 500
makes a new low. I’ll be looking for lower volume than we saw at the last low
and improving market internals.
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 declined from +47 to +33. (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 declined to HOLD: SENTIMENT & PRICE are bullish; VOLUME
& VIX are neutral.
I’m a Bear, longer-term. In the short-term, I am in
wait-and-see mode – we have important tests of prior lows coming up.
BEST ETFs - MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs
(Ranked Daily)
*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
WEDNESDAY MARKET INTERNALS
(NYSE DATA)
My basket of Market Internals are still signaling SELL.
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 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.
