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“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
“The labor market is too strong. Consumer spending is too strong. Business balance sheets are too strong. We simply are not in a recession. Is the risk of recession high? Yes, it is high and getting higher.” – Mohamed El-Erian, Chief economic advisor of Allianz. Story at...
https://finance.yahoo.com/news/2-reasons-the-risk-of-recession-is-getting-higher-and-higher-mohamed-el-erian-173114992.html
 
JOBLESS CLAIMS- 4 August, The Correct Report (CNBC)
“Initial claims for unemployment insurance totaled 260,000 last week, near the highest level since November amid a shift in the U.S. labor market. The total for the week ended July 30 was in line with the Dow Jones estimate...Continuing claims, which run a week behind the headline number, totaled 1.42 million, up 48,000 from the prior week and 83,000 from the beginning of July” Story at...
https://www.cnbc.com/2022/08/04/us-weekly-jobless-claims-.html
 
MARK MOBIUS SAYS US STOCKS HAVEN’T BOTTOMED (YahooFinance/Marketwatch)
“Mobius (Mobius Capital Partners) said he still thinks there will be more pain ahead for investors, even as stocks rebounded in July. ‘We probably have another leg down as the Fed continues to raise rates,’ he wrote. ‘I expect rates to go much higher and that means a number of companies will be in trouble and the glamorous tech stocks with no earnings and dependent on more and more cash inputs will be in trouble.” Mobius added that he won’t feel comfortable calling a bottom until he sees “complete surrender’.” Story at...
https://www.marketwatch.com/story/mark-mobius-sees-emerging-market-opportunities-but-awaits-complete-surrender-before-calling-u-s-stock-bottom-11659554518?siteid=yhoof2
 
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 slipped about 0.1% to 4152.
-VIX bucked the trend and fell about 1% to 21.7.
-The yield on the 10-year Treasury slipped to 2.697%.
 
PULLBACK DATA:
-Drop from Top: 13.4% as of today. 23.6% max.
-Trading Days since Top: 146-days.
The S&P 500 is 4.3% Below its 200-dMA & closed 5.4% Above its 50-dMA. It also closed above its 100-dMA again.
 
*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 remain confused. Indicators are bullish, but it seems so unlikely that the correction is over that I have not closed out the Short or Long positions.  Overall, I am long because of my core portfolio. I never position my portfolio less than 30% in stocks.  That way, I make money if I am bearish and the markets go up.  On the other hand, in a major bear market, I would not lose more than 15% if the markets were cut in half. 
 
TODAY’S COMMENT:
Smart Money has turned down.  This is always a concern since the indicator is fairly decent on its own.
“The Smart Money Index, or Smart Money Flow Index, was popularized by Don Hayes in the 1990s and seeks to understand what the "smart money" is doing relative to the "dumb money". This indicator exists in different variations, but is based on the same concept:
The “dumb money” trades at the start of the day since they're emotionally reacting to the overnight or early morning news. Trading on the news is not a smart thing to do. Meanwhile...
The "smart money" trades during the last hour of each trading day since they spend the day evaluating the market's price action.” From...
https://sentimentrader.com/blog/smart-money-index-everything-you-should-know
This indicator keeps a running tally of the Sum of the negative value of the early-morning change in the S&P 500, and adds the late-day change in S&P 500.
 
I use a variant of the concept. I ignore the morning action and focus on whether the trend of late day action is up or down. It has now turned down.
 
The overbought/oversold index remains overbought.
 
The S&P 500 remained above the 200-dMA again. Is one more day too much to ask? That would tend to confirm the rally may have further to run - but there’s no guarantee.
 
Resistance points for the rally, are: (1) at the 50% retracement point (top to bottom), about 4240; (2) the 200-dMA at 4342; (3) or 4370, because that is the 62% Fibonacci retracement point for those who believe in that sort of thing.
 
Today, the daily sum of 20 Indicators improved from +5 to +6 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations declined from +96 to +89. (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 took back control of the markets. I think it is time to increase stocks holdings, but I haven’t managed to do it yet.
 
The markets may be one piece of bad news from a market rout. I don’t know what that news may be, but it wouldn’t take much to kill the rally.
 
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 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.
 
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.