Best DOW Stocks ... Best ETFs … Stock Market Analysis ... Jobless Claims ... Philadelphia FED Index ... Leading Economic Index ... European Central Banks Hike Rates

 
“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
JOBLESS CLAIMS (CNBC)
“Initial jobless claims hit their highest level since mid-November last week, the latest sign that a historically tight labor market is beginning to slow, according to Labor Department data released Thursday. Claims totaled 251,000 for the week ended July 16, up 7,000 from the week before...” Story at...
https://www.cnbc.com/2022/07/21/jobless-claims-rise-again-in-another-sign-that-labor-market-is-cooling.html
 
PHILADELPHIA FED INDEX (RTT News)
“A report released by the Federal Reserve Bank of Philadelphia on Thursday showed regional manufacturing activity unexpectedly contracted at a faster rate in the month of July. The Philly Fed said its current general activity index slumped to a negative 12.3 in July from a negative 3.3 in June, with a negative reading indicating a contraction in regional manufacturing activity.” Story at...
https://www.rttnews.com/3298233/philly-fed-index-unexpectedly-slumps-further-into-negative-territory-in-july.aspx
 
LEADING ECONOMIC INDEX (Conference Board)
“The Conference Board Leading Economic Index® (LEI) for the U.S. decreased by 0.8 percent in June 2022 to 117.1 (2016=100), after declining by 0.6 percent in May. The LEI was down by 1.8 percent over the first half of 2022, a reversal from its 3.3 percent growth over the second half of 2021. ‘The US LEI declined for a fourth consecutive month suggesting economic growth is likely to slow further in the near-term as recession risks grow,’ said Ataman Ozyildirim, Senior Director of Economic Research at The Conference Board...A US recession around the end of this year and early next is now likely.” – Press release at...
https://www.conference-board.org/topics/us-leading-indicators
 
EUROPEAN CENTRAL BANK SURPRISES MARKETS WITH LARGER RATE HIKE (CNBC)
“The European Central Bank on Thursday increased interest rates for the first time in 11 years in an attempt to cool rampant inflation in the euro zone. The ECB, the central bank of the 19 nations that share the euro currency, surprised markets by pushing its benchmark rate up by 50 basis points, bringing its deposit rate to zero.” Story at... 
https://www.cnbc.com/2022/07/21/european-central-bank-raises-rates-by-50-basis-points-its-first-hike-in-11-years.html
 
SUBTLE MESSAGE IN THE VOLUME SUMMATION INDEX (McClellan Financial Publications)
“...The Volume RASI [Ratio-Adjusted Volume Summation Index] also shares a property with the A-D [advance-decline] RASI, in that it can show bullish strength when it is able to climb up above its +500 level.  The higher it goes above +500, the stronger the message.  Perhaps more importantly, it shows a lack of strength when it fails to get up above +500 on a rally attempt, and that is what we are seeing all during 2022.  Each countertrend rally attempt has seen the Volume RASI fall short of reaching the +500 level, telling us that the bears are in charge, and the bulls cannot achieve “escape velocity” in their rally attempts.” Commentary at...
https://www.mcoscillator.com/learning_center/weekly_chart/a_subtle_message_in_the_volume_summation_index/
 
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 rose about 1% to 3999.
-VIX dropped about 3% to 23.11.
-The yield on the 10-year Treasury fell to 2.881%.
 
PULLBACK DATA:
-Drop from Top: 16.6% as of today. 23.6% max.
-Trading Days since Top: 137-days.
The S&P 500 is 8.2% BELOW its 200-dMA & 2% 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:
None of the above stories are good news for the economy, but the sentiment has been so bearish that market participants are convinced that buying is the only thing to do now. Sentiment is a reverse indicator.  Overly bearish sentiment is bullish. There is one problem that should be considered – sometimes the herd is right.
 
Bollinger Bands were indicating overbought again today. RSI is not overbought and there are other oversold readings so technicals suggest the bounce/rally can keep going up.  The Index is only 3.4% below the 100-dMA and 8.2% below the 200-dMA.  Those are the overhead targets for the markets, though the 200-dMA seems an unlikely target.   
 
Snap Inc. reported today and there was a lot of talk on CNBC yesterday that Snap was going to be the “tell” for online ad revenue. Snap missed on top and bottom line and was down 27% after hours.  If that is a tell, internet companies are in trouble. Facebook was down 5% after hours; Alphabet (Goog) was down 3% after hours. They are suggesting a down-day for tomorrow. It may also derail the rally, but that probably depends more on the big tech names reporting next week.
 
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 +37 to +42. (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.”
 
Again today, there was high, unchanged volume. Over the last 3 weeks, there have been 5 days where unchanged volume was high. As I’ve often said, many believe that this indicator suggests investor confusion at market turning points. Ignoring the last 3 weeks, recent history shows this indicator has indicated a reversal of some kind, either now, or near future. My problem is that it is frequently a false signal. Sooner or later, it will be correct. If the indicator is sending a decent signal now, it is suggesting a reversal down.
 
I’m a Bear although it is possible that the rally will get to the 100-dMA and it is not impossible for the Index to reach the 200-dMA.
 
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
 
THURSDAY 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.