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IHS MARKIT COMPOSITE PMI (S&P Global)
“US private sector firms signaled a sharper fall in business activity during August, according to latest ‘flash’ PMI™ data from S&P Global. The decrease in output was the fastest seen since May 2020 and solid overall. The rate of contraction also outpaced anything recorded outside of the initial pandemic outbreak since the series began nearly 13- years ago... Commenting on the flash PMI data, Siân Jones, Senior Economist at S&P Global Market Intelligence said: “August flash PMI data signaled further disconcerting signs for the health of the US private sector. Demand conditions were dampened again, sparked by the impact of interest rate hikes and strong inflationary pressures on customer spending, which weighed on activity” Press release at...
https://www.pmi.spglobal.com/Public/Home/PressRelease/060c0e13d7fe45bfa897a470dff44fbb
 
NEW HOME SALES (Bloomberg)
“Sales of new US homes fell in July for the sixth time this year to the slowest pace since early 2016, extending a months-long deterioration in the housing market fueled by high borrowing costs and a pullback in demand. Purchases of new single-family homes decreased 12.6% to a 511,000 annualized pace from a revised 585,000 in June...” Story at...
https://www.bloomberg.com/news/articles/2022-08-23/us-new-home-sales-plummet-to-slowest-pace-since-early-2016
My cmt: New home sales are closely watched as a rececssion indicator.
 
PULLBACK AREA ABOUT TO BE REACHED (Heritage Capital)
“From high to low the banks plunged 35% this year and bottomed in July, well after the stock market. Unless I am really wrong and the rally ended, the banks should find a low and then exceed the early June highs before marching higher to regain 50% of the loss...If you want to know my biggest concern about the market right now, it’s the high yield bond sector which is acting worse than the stock market. That needs to change or stocks will likely continue lower.” Commentary at...
https://investfortomorrow.com/blog/pullback-area-about-to-be-reached-banks-trying/
My cmt: Paul Schatz remains a bull.
 
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 fell about 0.2% to 4129.
-VIX rose about 0.2% to 23.86.
-The yield on the 10-year Treasury rose to 3.049%.
 
PULLBACK DATA:
-Drop from Top: 13.9% as of today. 23.6% max.
-Trading Days since Top: 160-days.
The S&P 500 is 4.3% Below its 200-dMA & closed 3.9% Above its 50-dMA.
-Support points for the rally, are 4086 & 3974, the 100-dMA & 50-dMA, respectively.
 
The S&P 500 closed at its 57% retracement level 16 August. 50% is about what we normally see in bounces during corrections, but that is only a rough guide. 62% is the next higher Fibonacci retracement level. It failed to cross its 200-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.
SDS, 2x short S&P 500 ETF. (I added more Monday.)
 
TODAY’S COMMENT:
This morning on NBC’s Today show, they said that the floods in Texas were caused by global warning that allows the atmosphere to hold more water. So, the un-named tropical system that made landfall near the Texas Mexico border in late August and dumped a bunch of rain on Dallas couldn’t have happened without Global Warming? I am fed up with the media continuously mixing weather with climate. On to the subject at hand...
 
After a big down-day yesterday, we would have expected a positive-day today. It is somewhat concerning for the Bulls to see another down-day on the markets. New-home sales were bad and the markets may have reacted to that news. Today was the 4^th down-day in a row. Wednesday should be positive; if not, that would be bearish too.
 
Today, the daily sum of 20 Indicators improved from -2 to +1 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations slipped from +115 to +102. (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 HOLD: PRICE is bullish; SENTIMENT, VIX & VOLUME are neutral. I still expect the S&P 500 to test its prior low of 3667. Remember for the longer-term, one indicator trumps them all – “Don’t fight the FED.”
 
I’m a Bear at this point, still expecting a retest of the prior lows.
 
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 improved 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.) 
 

My stock-allocation in the portfolio is now roughly 40% invested in stocks, although technically, SSO isn’t a stock, but an options-based ETF.
 
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.