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“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
FOMC RATE DECISION (Reuters)
“The Federal Reserve said on Wednesday it would not flinch in its battle against the most intense breakout of inflation in the United States since the 1980s even if that means a "sustained period" of economic weakness and a slowing jobs market...the 75-basis-point rate increase announced by the Fed on Wednesday...has now jacked the central bank's overnight interest rate from near zero to a level between 2.25% and 2.50%. That is the fastest tightening of monetary policy since former Fed Chair Paul Volcker battled double-digit inflation in the 1980s.” Story at...
https://www.reuters.com/markets/us/fed-unveil-another-big-rate-hike-signs-economic-slowdown-grow-2022-07-27/
MY cmt: “...the 1981-82 recession [caused by FED tightening] was the worst economic downturn in the United States since the Great Depression.” From...
https://www.federalreservehistory.org/essays/recession-of-1981-82#:~:text=July%201981%E2%80%93November%201982,effort%20to%20fight%20mounting%20inflation.&text=Prior%20to%20the%202007%2D09,States%20since%20the%20Great%20Depression.
 
DURABLE ORDERS (Bloomberg)
“Orders placed with US factories for durable goods rose unexpectedly in June, fueled by a surge in defense aircraft as well as sustained demand for equipment. Bookings for durable goods -- items meant to last at least three years -- increased 1.9% in June after a 0.8% advance a month earlier...” Story at...
https://www.bloomberg.com/news/articles/2022-07-27/us-durable-goods-orders-rise-unexpectedly-on-defense-bookings
 
EIA CRUDE OIL INVENTORIES (EIA)
“U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 4.5 million barrels from the previous week. At 422.1 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
The report indicates demand is strong.
 
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 rose about 2.6% to 4023.
-VIX dipped about 6% to 23.28.
-The yield on the 10-year Treasury slipped to 2.790%.
 
PULLBACK DATA:
-Drop from Top: 16.1% as of today. 23.6% max.
-Trading Days since Top: 141-days.
The S&P 500 is 7.5% Below its 200-dMA & closed 2.7% 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:
The FED decision went as expected and the markets loved the press conference.  No surprises.
 
Today was a statistically significant up-day. That just means that the price-volume move exceeded my statistical parameters. Statistics show that a statistically-significant, up-day is followed by a down-day about 60% of the time.  Statistically-significant, up-days almost always coincide with tops, but not all statistically-significant, up-days occur at tops. Today could be a top, but there are no top indicators warning and that is not what the bears want to see.
 
Today was also a bullish Follow-Through day. “A follow-through day occurs during a market correction when a major index closes significantly higher than the previous day, and in greater volume. It happens Day 4 or later of an attempted rally.” From https://education.investors.com/financial-dictionary/ibd-terms/follow--through-day-concept#:~:text=A%20follow%2Dthrough%20day%20occurs,later%20of%20an%20attempted%20rally.
 
Buying Pressure minus selling Pressure is fading.  Money Trend is rising slowly. The Smart Money is very bullish. New-High New-Low data is bullish, but the 40-dMA of New Highs is still falling and that is worrisome.
 
Today, the daily sum of 20 Indicators remained +10 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations improved from +67 to +82. (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.
 
Overall, it still looks like 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. This still looks like a rally in a bear market. I think 4300 is a good target for the rally.
 
LONG-TERM INDICATOR: The Long Term NTSM indicator remained BUY: PRICE & VOLUME are bullish; SENTIMENT & VIX is neutral. I still expect the S&P 500 to test its prior low of 3667, but it may be possible to trade this market now, but remember for the longer-term, one indicator trumps them all – “Don’t fight the FED.”
 
I’m a Bear longer-term; short-term the bulls remain in charge. FOMO (fear of missing out) is still not done. I may add a long position to counter my small short position.
 
BEST ETFs - MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs (Ranked Daily)
My chart of this data is looking funky again. The top four ETF ranking follows:
(1)  IBB (2) XLV (3) XLU (4) 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.

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.