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“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
EXISITNG HOME SALES (NAR)
“Existing-home sales declined for the fifth straight month to a seasonally adjusted annual rate of 5.12 million. Sales were down 5.4% from May and 14.2% from one year ago.” Report at...
https://www.nar.realtor/newsroom/existing-home-sales-slid-5-4-in-june
There was a low point for Coronavirus a year ago so the 14.2% drop in sales from a year earlier is not related to the virus. It is a huge drop. The housing market is a good recession indicator, but I am not an economist and I don’t know the metrics to predict what this means for recession probability.  In a separate report, CNBC reported that mortgage demand hit a 22-year low last week. 22 years ago would be at the start of the dot.com crash and recession.
 
EIA CRUDE INVENTORIES (EIA)
“U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 0.4 million barrels from the previous week. At 426.6 million barrels, U.S. crude oil inventories are about 6% below the five year average for this time of year.” Report at...
https://ir.eia.gov/wpsr/wpsrsummary.pdf
Falling inventories suggest increased demand and rising prices.
 
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 rose about 0.6% to 3960.
-VIX dropped about 3% to 23.88.
-The yield on the 10-year Treasury rose to 3.031%.
 
PULLBACK DATA:
-Drop from Top: 17.4% as of today. 23.6% max.
-Trading Days since Top: 136-days.
The S&P 500 is 9.1% BELOW its 200-dMA & 1% ABOVE 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, short the S&P 500 ETF.
 
TODAY’S COMMENT:
Bollinger Bands were indicating overbought today.  Yesterday we saw a Bollinger Band Squeeze, suggesting a big breakout is coming, although the direction of the breakout is not clear.  Given the overbought condition in Bollinger Bands, the breakout direction chances may be evenly split between up or down.
 
I also see that breadth (Issues advancing on the NYSE) is breaking above its trendline as noted in the below chart.

While Breadth has been breaking out, my Breadth vs. the S&P 500 indicator is currently neutral.
 
The S&P 500 stayed above its 50-dMA today. With 2 successive closes above the 50-day, the trendline break is more firmly established.  This may suggest further upside. Longer term, the 200-dMA is still falling as it has for the last 2 months. That still indicates the longer-term trend remains down.
 
Today, the daily sum of 20 Indicators remained +13 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations improved from +26 to +37. (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: PRICE, SENTIMENT, VOLUME & VIX are bullish. I still expect the S&P 500 to test its prior low of 3667, but it may be possible to trade this market now. One indicator trumps them all – “Don’t fight the FED.”
 
I’m a Bear, but in the mean-time, the Bollinger Squeeze suggests a big move is coming soon. If markets keep moving up, I will add XLK as a short-term trade to counter my short position in SH. This would counter the short hedge without having to sell the short position. I’m in no rush though; I don’t like to chase a rally.
 
BEST ETFs - MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs (Ranked Daily)
My chart of this data is looking funky. The top four ETF ranking follows:
(1)  IBB (2) XLV (3) XLU (4) ITA These are conservative, “investors-are-playing-defense,” leaders.
*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 remained BUY.
 
(Market Internals are a decent trend-following analysis of current market action, but should not be used alone for short term trading. 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.