“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
JOLTS JOB OPENINGS (CNBC)
“Job openings plunged in June to their lowest level since September 2021 in a potential sign that a historically tight labor market is starting to slow. The total of employment vacancies fell to about 10.7 million through the last day of June, a decline of 605,000 or 5.4%, according to the Job Openings and Labor Turnover Survey...” Story at...
https://www.cnbc.com/2022/08/02/job-openings-fell-sharply-in-june-as-labor-market-shows-signs-of-slowing.html
There are still 1.8 open jobs for every available worker so wage inflation pressure will not change due to this report.
ISM MANUFATURING INDEX (Briefing.com)
“The July ISM Manufacturing Index decreased to 52.8% (Briefing.com consensus 52.5%) from 53.0% in June. A number above 50.0% is indicative of expansion. July marked the 26th consecutive month of expansion in the manufacturing sector, although the July reading was the lowest reading since June 2020.” Details at...
https://www.briefing.com/calendars/economic/display-article?ArticleId=ER20220801100000ISMManufacturingIndex&FileName=napm.htm
FACTSET EARNINGS (Factset)
“For Q2 2022, the blended earnings growth rate for the S&P 500 is 6.0%. If 6.0% is the actual growth rate for the quarter, it will mark the lowest earnings growth rate reported by the index since Q4 2020 (4.0%)... For Q3 2022, 28 S&P 500 companies have issued negative EPS guidance and 17 S&P 500 company has issued positive EPS guidance... The forward 12-month P/E ratio for the S&P 500 is 17.1. This P/E ratio is below the 5-year average (18.6) but above the 10-year average (17.0).” From Factset at...
https://advantage.factset.com/hubfs/Website/Resources%20Section/Research%20Desk/Earnings%20Insight/EarningsInsight_072922.pdf
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 slipped about 0.7% to 4091.
-VIX rose about 5% to 3.93.
-The yield on the 10-year Treasury rose to 2.714%.
PULLBACK DATA:
-Drop from Top: 14.7% as of today. 23.6% max.
-Trading Days since Top: 145-days.
The S&P 500 is 5.8% Below its 200-dMA & closed 4.1% Above its 50-dMA. It also closed slightly above its 100-dMA Friday, but has not closed above it since then.
*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.
SSO – 2x Long S&P 50 ETF. I’ll probably sell SSO Wednesday. Boeing would be a better long play. I could probably hold it thru future declines.
TODAY’S COMMENT:
The S&P 500 has not managed to close above its 100-dMA since Friday, 29 July. We need to see 3 consecutive closes above the 100-dMA to feel more confident that it is no longer in play. Until proven otherwise, the 100-day looks like significant resistance. This would be a logical point for the rally to fail. In addition to the 100-dMA, it is also the vicinity of the June highs and the April lows. Now the 100-dMA is just resistance.
I also note that the 10-day sum of my daily 20 indicators
has peaked at each of the highs in this rally. It appears to have peaked Monday
and this may be suggesting an end to the rally. What could have caused this? I would
suggest that the recent commentary by the FED...
“An increasing number of Federal Reserve officials are pushing back against the latest market rally, dismissing recent optimism about an upcoming “pivot” in monetary policy as wishful thinking and warning that the central bank will be forced to continue aggressively raising rates until inflation meaningfully declines.” From Forbes (2 Aug 22) at...
https://www.forbes.com/sites/sergeiklebnikov/2022/08/02/heres-why-more-fed-officials-are-warning-that-the-market-is-getting-ahead-of-itself/?sh=2111014f33d1
Good Bye, Market Rally. Who can hang a name on you? When
you change with every new day. Still, I’m gonna’ miss you.
Well, maybe the rally’s not dead yet. It could be just resting.
We’ll see in the next day or two.
Today, the daily sum of 20 Indicators declined from +13
to +5 (a positive number is bullish; negatives are bearish); the 10-day
smoothed sum that smooths the daily fluctuations declined from +111 to +103.
(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 are bullish; 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, but they may be losing some strength.
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
TUESDAY MARKET INTERNALS (NYSE
DATA)
My basket of Market Internals declined to HOLD.
(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.)
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.
“Job openings plunged in June to their lowest level since September 2021 in a potential sign that a historically tight labor market is starting to slow. The total of employment vacancies fell to about 10.7 million through the last day of June, a decline of 605,000 or 5.4%, according to the Job Openings and Labor Turnover Survey...” Story at...
https://www.cnbc.com/2022/08/02/job-openings-fell-sharply-in-june-as-labor-market-shows-signs-of-slowing.html
There are still 1.8 open jobs for every available worker so wage inflation pressure will not change due to this report.
“The July ISM Manufacturing Index decreased to 52.8% (Briefing.com consensus 52.5%) from 53.0% in June. A number above 50.0% is indicative of expansion. July marked the 26th consecutive month of expansion in the manufacturing sector, although the July reading was the lowest reading since June 2020.” Details at...
https://www.briefing.com/calendars/economic/display-article?ArticleId=ER20220801100000ISMManufacturingIndex&FileName=napm.htm
“For Q2 2022, the blended earnings growth rate for the S&P 500 is 6.0%. If 6.0% is the actual growth rate for the quarter, it will mark the lowest earnings growth rate reported by the index since Q4 2020 (4.0%)... For Q3 2022, 28 S&P 500 companies have issued negative EPS guidance and 17 S&P 500 company has issued positive EPS guidance... The forward 12-month P/E ratio for the S&P 500 is 17.1. This P/E ratio is below the 5-year average (18.6) but above the 10-year average (17.0).” From Factset at...
https://advantage.factset.com/hubfs/Website/Resources%20Section/Research%20Desk/Earnings%20Insight/EarningsInsight_072922.pdf
-Tuesday the S&P 500 slipped about 0.7% to 4091.
-VIX rose about 5% to 3.93.
-The yield on the 10-year Treasury rose to 2.714%.
-Drop from Top: 14.7% as of today. 23.6% max.
-Trading Days since Top: 145-days.
The S&P 500 is 5.8% Below its 200-dMA & closed 4.1% Above its 50-dMA. It also closed slightly above its 100-dMA Friday, but has not closed above it since then.
SH, short the S&P 500 ETF.
SSO – 2x Long S&P 50 ETF. I’ll probably sell SSO Wednesday. Boeing would be a better long play. I could probably hold it thru future declines.
The S&P 500 has not managed to close above its 100-dMA since Friday, 29 July. We need to see 3 consecutive closes above the 100-dMA to feel more confident that it is no longer in play. Until proven otherwise, the 100-day looks like significant resistance. This would be a logical point for the rally to fail. In addition to the 100-dMA, it is also the vicinity of the June highs and the April lows. Now the 100-dMA is just resistance.
“An increasing number of Federal Reserve officials are pushing back against the latest market rally, dismissing recent optimism about an upcoming “pivot” in monetary policy as wishful thinking and warning that the central bank will be forced to continue aggressively raising rates until inflation meaningfully declines.” From Forbes (2 Aug 22) at...
https://www.forbes.com/sites/sergeiklebnikov/2022/08/02/heres-why-more-fed-officials-are-warning-that-the-market-is-getting-ahead-of-itself/?sh=2111014f33d1
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
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
