Best DOW Stocks ... Best ETFs … Stock Market Analysis ... Personal Spending ... PCE Prices ... Chicago PMI

 
“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
Winds are gusting to 53 mph at the Craney Island river gauge near my house (69 mph at the Virginia Beach ocean front); tides are 3ft above normal; Lights are flickering occasionally. We’re 350 miles from Ian’s second landfall. Ian is a bear.
 
PERSONAL SPENDING / PCE PRICES (Reuters)
“Consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased 0.4% last month...The personal consumption expenditures (PCE) price index gained 0.3% after dipping 0.1% in July...The so-called core PCE price index climbed 4.9% on a year-on-year basis in August after increasing 4.7% in July.” Story at...
https://www.reuters.com/markets/us/us-consumer-spending-rebounds-august-inflation-picks-up-2022-09-30/
 
CHICAGO PMI (MarketWatch)
“The Chicago Business Barometer, also known as the Chicago PMI, dropped sharply to 45.7 in September from 52.2 in the prior month.” Story at... 
https://www.marketwatch.com/story/chicago-pmi-falls-sharply-in-september-to-lowest-level-in-more-than-two-years-11664545969
 
UNIVERSITY OF MICHIGAN CONSUMER SENTIMENT – FINAL (Univ of Michigan)
“Consumer sentiment was essentially unchanged in September, just 0.4 index points above August, according to the University of Michigan Surveys of Consumers... ‘Consumers welcomed the slowdown in inflation last month, but they show signs of uncertainty over the trajectory of the economy...’”
https://news.umich.edu/uncertainty-clouds-consumers-outlook-on-the-economy/
 
MARKET REPORT / ANALYSIS
-Friday the S&P 500 fell about 1.5% to 3586.
-VIX went against trend and declined 0.2% to 31.62.
-The yield on the 10-year Treasury rose to 3.829%.
 
PULLBACK DATA:
-Drop from Top: 22.5% as of today. 24% max (on a closing basis).
-Trading Days since Top: 185-days.
The S&P 500 is 11.9% Below its 200-dMA & 7.6% Below its 50-dMA.
Support is around 3250, the lows of September 2020.
 
VIX WATCH: VIX is now about 32. At the bottom of the Financial Crisis in 2009 the VIX was 50 or so. During that bear market VIX hit 80 at one point. This doesn’t say that this correction has a lot further to fall, but it does cause one to wonder.
 
*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:
CVX
SPY – S&P 500
SSO - SOLD
I sold SSO. Markets don’t want to go up, even though there are oversold signs.
 
TODAY’S COMMENT:
That’s an ugly close.
 

On Fridays, I summarize a number of indicators to get a weekly feel for trend. The Friday rundown of indicators improved, but remained bearish (18-bear and 9-bull). These indicators tend to be both long-term and short-term, so they are different than the 20 that I report on daily. Details follow:
 
BULL SIGNS
-The longer-term, 50-dEMA, Fosback Hi-Low Logic Index is Bullish.
-The short-term, 10-day, Fosback Hi-Low Logic Index.
-Overbought/Oversold Index (Advance/Decline Ratio) is oversold.  
-The S&P 500 is 14.4% below its 200-dMA. (Bull indicator is 12% below the 200-day, although this is based on “normal” pullbacks.)
-The smoothed advancing volume on the NYSE is rising.
-Issues advancing on the NYSE (Breadth) compared to the S&P 500 are bullish.
-My Money Trend indicator turned up today.
-There was a Follow-thru day 28 Sept and it cancels the 13 Distribution Days over the last 5 weeks.

-RSI
 
NEUTRAL
-Bollinger Bands.
-There have been 3 Statistically-Significant days (big moves in price-volume) in the last 15-days...neutral.
-There have been 7 up-days over the last 20 sessions. – This works with sentiment. Sentiment is too high so this is neutral.
-There have been 2 up-days over the last 10 sessions – leaning bullish, but neutral.
-The Calm-before-the-Storm/Panic Indicator warned on 13 September - expired.
-Sentiment.
-The size of up-moves has been smaller than the size of down-moves over the last month, but not enough to send a signal.
-There was an Inverse Zweig Breadth Collapse (negative Breadth Thrust) 21 June. That’s a rare, very-bearish sign, but it was several-weeks ago - expired.
-The 52-week, New-high/new-low ratio improved by 2.7 standard deviations on 28 Sep – too small to send a signal.
-There was a Hindenburg Omen signal 8 April – it was canceled when the McClellan Oscillator turned bullish.
-2.8% of all issues traded on the NYSE made new, 52-week highs when the S&P 500 made a new all-time-high, 3 January. (There is no bullish signal for this indicator.) This indicated that the advance was too narrow and a correction was likely to be >10%. – It proved correct, but is now Expired
-The Smart Money (late-day action) is flat.
-S&P 500 is underperforming the Utilities (XLU), but sharply improving – call it neutral.
 
BEAR SIGNS
-The 10-dMA percentage of issues advancing on the NYSE (Breadth) is below 50%.
-The 50-dMA percentage of issues advancing on the NYSE (Breadth) is below 50.
-The 100-dMA percentage of issues advancing on the NYSE (Breadth) is below 50%
-The 50-dMA percentage of issues advancing on the NYSE (Breadth) has been below 50%, for 3 days in a row below 50% for my “correction-now” signal. – It hardly matters now.
-McClellan Oscillator is negative.
-Slope of the 40-dMA of New-highs is falling.
-23 Sept was a bearish, >90%-down-volume day. 28 Sept did not mee the tests for a 90% high volume up-day.
-MACD of the percentage of issues advancing on the NYSE (breadth) made a bearish crossover 30 Aug.
-MACD of S&P 500 price made a bearish crossover 22 Aug.
-21 Sep was a Bearish Outside Reversal Day.
-Smoothed Buying Pressure minus Selling Pressure is falling.
-The 5-10-20 Timer System is SELL; the 5-dEMA and 10-dEMA are both below the 20-dEMA. (The 5-day is below the 10-day so short-term momentum is bearish too.)
-VIX is rising quickly.
-Long-term new-high/new-low data.
-Short-term new-high/new-low data.
-The graph of the 100-day Count (the 100-day sum of up-days) is falling.
-Cyclical Industrials (XLI-ETF) are under-performing the S&P 500 so I’ll call it bearish.
- Only 23% of the 15-ETFs that I track have been up over the last 10-days.
 
On Friday, 21 February, 2 days after the top before the Coronavirus pullback, there were 10 bear-signs and 1 bull-sign. Now there are 18 bear-signs and 9-Bull. Last week, there were 23 bear-signs and 4 bull-signs. Friday indicators are still giving a very bearish indication.
 
Friday was another new-low.  Today’s move was on higher volume, and that’s not a bullish sign. Today was quarter-end and some of the volume is due to window dressing by money managers, so I don’t give today’s volume numbers too much weight.
 
Today, the daily sum of 20 Indicators improved from -4 to -2 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations improved from -81 to -80. (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 SELL: VOLUME & VIX are bearish; SENTIMENT & PRICE are neutral.  Remember for the longer-term, one indicator trumps them all – “Don’t fight the FED.”
 
Bottom line: I’m a Bear again; however, I added stock to positions to get to about 35% invested in stocks this week. There are oversold conditions so a bounce next week is not out of the question. 
 
BEST ETFs - MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs (Ranked Daily)
None of the ETFs I track are above their 120-dMA so the chart is no good. ETF ranking follows:
#1.IBB  #2.XLV  #3.XLY
*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.
My momentum chart for the Dow has blown up. DOW 30 momentum ranking follows:
#1 UNH  #2.WMT  #3.MRK
For more details, see NTSM Page at…
https://navigatethestockmarket.blogspot.com/p/a-system-for-trading-dow-30-stocks-my_8.html
 

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 current invested position is about 35% stocks, including stock mutual funds and ETFs.
 
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.

Best DOW Stocks ... Best ETFs … Stock Market Analysis ... Jobless Claims ... GDP

 
“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
GDP (Bureau of Economic Analysis)
“Real gross domestic product (GDP) decreased at an annual rate of 0.6 percent in the second quarter of 2022, following a decrease of 1.6 percent in the first quarter. The second-quarter decrease was the same as previously estimated in the “second” estimate released in August. The smaller decrease in the second quarter, compared to the first quarter, reflected an upturn in exports and an acceleration in consumer spending.” Report at...
https://www.bea.gov/data/gdp/gross-domestic-product
 
JOBLESS CLAIMS (Yahoo Finance/Reuters)
Initial claims for state unemployment benefits dropped 16,000 to a seasonally adjusted 193,000 for the week ended Sept. 24, the Labor Department said on Thursday...The jobless rate rose to 3.7% in August from 3.5% in July... the economy contracted in the first half of this year, it is not in recession, with the income side of the growth ledger expanding moderately.” Story at... 
https://finance.yahoo.com/news/u-weekly-jobless-claims-fall-123942093.html
 
SOMETHING BREAKING PART II – Excerpt (Heritage Capital)
“Currency markets do not move like this during “normal” times. These moves are extreme and historic. And while this is great for Americans to travel to the UK and Europe, there are much bigger problems at play without a soft landing. Volatility is here and it isn’t likely to quiet until the markets get to the other side of the bottom I see coming. Investors should always consider ROTH conversions when assets have depreciated as well as tax loss harvesting.” – Paul Schatz, President, Heritage Capital. Commentary at...
https://investfortomorrow.com/blog/something-breaking/
Paul has been predicting a low in October and he is sticking with that call.
 
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 fell about 2.1% to 3640.
-VIX rose about 6% to 31.84.
-The yield on the 10-year Treasury rose to 3.788%.
 
PULLBACK DATA:
-Drop from Top: 22.5% as of today. 24% max (on a closing basis).
-Trading Days since Top: 185-days.
The S&P 500 is 11.9% Below its 200-dMA & 7.6% Below its 50-dMA.
Support is around 3250, the lows of September 2020.
 
VIX WATCH: VIX is now about 32. At the bottom of the Financial Crisis in 2009 the VIX was 50 or so. During that bear market VIX hit 80 at one point. This doesn’t say that this correction has a lot further to fall, but it does cause one to wonder.
 
*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:
CVX
SPY – S&P 500
SSO - 2x S&P 500
I held trading positions Thursday. Markets are very oversold.  I’ll wait another day before I decide whether to hold SSO; a big down day is often followed by an up-day. We’ll see.
 
TODAY’S COMMENT:
Where did that bounce go? There could still be a bounce; Markets are oversold, but today, they gave back all of yesterday’s gain. I’m going to wait another day and see if we get a move higher. If we do, it might not last as long as the last rally. Investors are getting shell-shocked.
 
Thursday was another new-low.  Today’s move was on higher volume, so no bottom today.
 
Today was a statistically significant down-day. That just means that the price-volume move exceeded my statistical parameters. Statistics show that a statistically-significant, down-day is followed by an up-day about 60% of the time. 
 
Today, the daily sum of 20 Indicators improved from -7 to -3 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations declined from -79 to -80. (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 is either SELL or HOLD depending on the value of Sentiment that I will get later tonight. Remember for the longer-term, one indicator trumps them all – “Don’t fight the FED.”
 
Bottom line: I’m a skeptical Bull; I bought some stocks Wednesday and I’m back to about 40% invested in stocks.
 
BEST ETFs - MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs (Ranked Daily)
None of the ETFs I track are above their 120-dMA so the chart is no good. ETF ranking follows:
#1.IBB  #2.XLY  #3.XLU
*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.
My momentum chart for the Dow has blown up. DOW 30 momentum ranking follows:
#1 UNH  #2.WMT  #3.AAPL, MCD
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 current invested position is about 40% stocks, including stock mutual funds and ETFs..
 
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.

Best DOW Stocks ... Best ETFs … Stock Market Analysis ... Pending Home Sales ... Crude Inventories

 
“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
“If I had to pick the most worrying characteristic of our current dystopia, I would choose the unsettling disconnect between the seriousness of the challenges we face and the public discourse that is supposed to be addressing them...Our leaders of both parties now seem free to utter things completely at odds with reality and logic.” -Gerald Baker, Editor at Large, WSJ. Opinion at...
https://www.wsj.com/news/author/gerard-baker
 
PENDING HOME SALES (Yahoo Finance)
“Pending home sales in the U.S. fell more than expected in August — notching the third consecutive month of declines — as higher borrowing costs pushed more prospective buyers to the sidelines...Year over year, pending sales were down by 24.2%.” Story at...
https://finance.yahoo.com/news/housing-pending-home-sales-drop-140030400.html
 
CRUDE INVENTORIES (EIA)
“U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 0.2 million barrels from the previous week. At 430.6 million barrels, U.S. crude oil inventories are about 2% below the five year average for this time of year.” Report at...
https://ir.eia.gov/wpsr/wpsrsummary.pdf
 
WHITE HOUSE PHONE LOGS WERE FAKED (DURING THE RIOTS) (msn.com)
“...when we looked for White House calls during the blackout, we saw what we expected to see: the president’s attorneys, family members, allies, and top political advisers all calling out to or receiving calls from West Wing root numbers. It was easy to see that, contrary to the call logs, White House lines were active during the attack on the Capitol...” Story at...
How the Jan. 6 committee researchers found that the White House call log during the attack was a fraud (msn.com)
What were they hiding?
 
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 rose about 2% to 3719.
-VIX fell about 7% to 30.18.
-The yield on the 10-year Treasury slipped to 3.736%.
 
PULLBACK DATA:
-Drop from Top: 22.5% as of today. 24% max (on a closing basis).
-Trading Days since Top: 185-days.
The S&P 500 is 11.9% Below its 200-dMA & 7.6% Below its 50-dMA.
Support is around 3250, the lows of September 2020.
 
VIX WATCH: VIX is now about 30. At the bottom of the Financial Crisis in 2009 the VIX was 50 or so. During that bear market VIX hit 80 at one point. This doesn’t say that this correction has a lot further to fall, but it does cause one to wonder.
 
*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:
CVX – I added Chevron because it is close to its lower trend line; has a PE below 10 and pays nearly a 4% dividend. The Biden administration is going to replenish the strategic petroleum reserve after the election so, oil prices should go up.
SPY – S&P 500
SSO - 2x S&P 500
 
TODAY’S COMMENT:
We got the reversal upward as was indicated by market internals Tuesday, but we almost saw a very bullish sign.
 
90% of the volume on the NYSE was up-volume Wednesday.  That’s a good sign, but there was some late-day weakness that meant the day did not meet the Lowry Research test for a bullish 90% up-volume day. That would have given a signal of a bottom, but it was not to be. For now, we have to assume that the up-move is a bounce, not a bottom.
 
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, down-day is followed by a down-day about 60% of the time. 
 
Today, the daily sum of 20 Indicators improved from -8 to -7 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations declined from -70 to -79. (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 SELL: VOLUME & VIX are bearish; SENTIMENT & PRICE are neutral. Remember for the longer-term, one indicator trumps them all – “Don’t fight the FED.”
 
Bottom line: I’m a skeptical Bull; I bought some stocks Wednesday and I’m back to about 40% invested in stocks.
 
BEST ETFs - MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs (Ranked Daily)
None of the ETFs I track are above their 120-dMA so the chart is no good. ETF ranking follows:
#1. IBB #2. XLU XLY #3.
*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.
My momentum chart for the Dow has blown up. DOW 30 momentum ranking follows:
#1 UNH; #2. AAPL #3. MCD
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 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.) 
 
 

...BUT I ADDED STOCK POSITIONS TO INCREASE TO 40% INVESTED IN STOCKS, WEDNESDAY.
 
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.

Looks Like a Bounce

 
“Europe was investigating on Tuesday what Germany, Denmark and Sweden said were attacks which had caused major leaks into the Baltic Sea from two Russian gas pipelines at the centre of an energy standoff.”
https://www.reuters.com/business/energy/mystery-gas-leaks-hit-major-russian-undersea-gas-pipelines-europe-2022-09-27/
 
Asian markets were down big last night; the Chinese Yuan is collapsing; someone blew-up 3 Nord Stream gas lines; UK currency may cause a global crisis...and the markets are up?  That’s a good sign.
 
Still, my guess is that we’re seeing a bounce.  To get a bottom I think we’ll need to see a big flush out, down-day and that hasn’t yet occurred in this correction. I’m adding some stock positions SPY (S&P 500) and I may add SSO (2xS&P 500) at 1230 or so. It’s often good to buy during Wall Street lunch hour since markets often dip then.
 
I’ll probably be around 35-40% invested in stocks today.

Best DOW Stocks ... Best ETFs … Stock Market Analysis ... Durable Orders ... Consumer Confidence ... New Home Sales

 
“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
DURABLE ORDERS (Nasdaq.com)
“The Commerce Department said durable goods orders slipped by 0.2 percent in August after edging down by 0.1 percent in July. Economists had expected durable goods orders to decline by 0.4 percent.” Story at...
https://www.nasdaq.com/articles/u.s.-durable-goods-orders-edge-slightly-lower-for-second-straight-month
 
CONSUMER CONFIDENCE (Conference Board vis prnewswire)
"Consumer confidence improved in September for the second consecutive month supported in particular by jobs, wages, and declining gas prices," said Lynn Franco, Senior Director of Economic Indicators at The Conference Board. "The Present Situation Index rose again, after declining from April through July. The Expectations Index also improved from summer lows, but recession risks nonetheless persist. Concerns about inflation dissipated further in September—prompted largely by declining prices at the gas pump—and are now at their lowest level since the start of the year." Press release at...
https://www.prnewswire.com/news-releases/consumer-confidence-improved-again-in-september-301634267.html
 
NEW HOME SALES (yahooFinance)
“New home sales unexpectedly increased in August from the month before, but the decline in median and average prices suggests that home builders are open for negotiation as the overall housing market cools.
Sales of newly constructed homes came in at a seasonally adjusted annual rate of 685,000, up 28.8% from July's revised pace of 532,000 and 0.1% below the year ago...” Story at...
https://finance.yahoo.com/news/new-home-sales-jump-august-142456527.html
 
BEAR MARKET BOTTOM (YahooFinance)
"I think this will be a bear market with a recession," Stovall said on Yahoo Finance Live (video above). "Bear markets with recessions have ended up being deeper and lasting longer than those without a recession, with the average decline being 35%. So I think we will probably end up seeing this bear market bottom around 3,200." Story at...
https://finance.yahoo.com/news/stock-market-may-bottom-according-to-one-strategist-173117343.html
 
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 fell about 0.2% to 3647.
-VIX rose about 1% to 32.60.
-The yield on the 10-year Treasury was 3.946%.
 
PULLBACK DATA:
-Drop from Top: 24% as of today. 24% max (on a closing basis).
-Trading Days since Top: 184-days.
The S&P 500 is 13.7% Below its 200-dMA & 9.5% Below its 50-dMA.
Support is around 3250, the lows of September 2020.
 
VIX WATCH: VIX is now about 32.6. At the bottom of the Financial Crisis in 2009 the VIX was 50 or so. During that bear market VIX hit 80 at one point. This doesn’t say for certain that this correction has a lot further to fall, but it does cause one to wonder.
 
*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 – sold Tuesday.
 
TODAY’S COMMENT:
Was the bottom today? On the recent new lows, yesterday and today, volume has been dropping. That’s suggesting that selling is fading. Investors are less fearful at these lows than they were in June. We also note that the “Buying-Pressure minus Selling-Pressure” indicator ticked up slightly today (bullish), even though the Index fell. More than half of the volume on the NYSE was up today, dramatically better than at prior lows.
 
Breadth has improved at recent lows over the June low and were better Tuesday than Monday. New-high, new-low numbers improved too.
 
Tuesday unchanged volume was high. As I’ve often said, many believe that this indicator suggests investor confusion at market turning points. My problem is that it is frequently a false signal, but I will say this; this indicator has been correct the last three times we’ve seen it. Days with high unchanged volume are shown as RED triangles on the following chart.  Circles indicate statistically significant days and boxes designate outside reversal days.

If the indicator is sending a decent signal now, it is suggesting a reversal upward.
 
Today, the daily sum of 20 Indicators improved from -11 to -8 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations declined from -63 to -70. (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 SELL: VOLUME & VIX are bearish; SENTIMENT & PRICE are neutral. Remember for the longer-term, one indicator trumps them all – “Don’t fight the FED.”
 
All in all, the numbers are suggesting a bottom, or at least a bounce. There are issues though; we didn’t see much buying at the close - the S&P 500 fell in the last hour. Also, the Smart Money indicator (that tracks late day action) is falling and that’s a bearish sign.
 
If the bottom was in, I would have expected to see the Pros buying late in the day, today, so that’s a worry. Still, S&P 500 futures are up 0.35% as I write this. We’ll have to wait and see tomorrow whether there is significant buying that would confirm a bullish move. If nothing else, the signs are suggesting at least a bounce higher.
 
Bottom line: I’m a skeptical Bull; I’ll buy some stocks tomorrow and see what other investors are doing. Perhaps I’ll get back to 40 or 50% invested.
 
BEST ETFs - MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs (Ranked Daily)
None of the ETFs I track are above their 120-dMA so the chart is no good. ETF ranking follows:
#1 XLU; #2. XLV #3. IBB
*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.
My momentum chart for the Dow has blown up. DOW 30 momentum ranking follows:
#1 UNH; #2. WMT #3. MCD
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 remained SELL.
 
(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.) 
 

...BUT I’LL MOVE TO 40 OR 50% INVESTED IN STOCKS WEDNESDAY..
 
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.

Taking Profits in Short Positions

Market internals are improving (breadth, new-highs-new-lows, volumes) in the early afternoon compared to the prior low. We don’t know if these will generate a buy-signal at the close. Bounce or bottom (?)...I don’t know, but they are enough to suggest reducing or eliminating short positions. I am selling all remaining short positions.

Best DOW Stocks ... Best ETFs … Stock Market Analysis ... CFNA Index ... Dallas FED Manufacturing

“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
CHICAGO FED NATIONAL ACTVITY INDEX (Yahoo Finance)
“U.S. economic activity slowed in August as production-related measures slipped and employment indicators rose moderately, data from the Federal Reserve Bank of Chicago showed on Monday.” Story at...
https://finance.yahoo.com/news/chicago-fed-national-activity-index-142116106.html
 
DALLAS FED MANUFACTURING INDEX (Morningstar)
“Manufacturing activity in Texas declined in August for the fourth straight month while factory output stagnated, data from a survey from the Federal Reserve Bank of Dallas showed Monday.
The index for general business activity of the Texas Manufacturing Outlook Survey, which assesses business conditions of the state's factory sector, rose to minus 12.9 in August from minus 22.6 the previous month. The index suggests regional activity continued to contract over the month, but to a lesser degree than in July.” Story at...
https://www.morningstar.com/news/dow-jones/202208295391/texas-factory-activity-fell-again-in-august-as-output-stalled-dallas-fed
 
SELLOFF NOT OVER (Yahoo Finance)
“We’re of the view that 2023 earnings estimates have to continue to decline,” a note outlining a discussion between Baird’s Ross Mayfield and Ryan Grabinski said. “We have our 2023 recession odds at about 50% right now, and in a recession, earnings decline by an average of about 30%. The consensus 2023 earnings estimate has only come down 3.3% from its June highs, and we think those estimates will be revised lower, especially if the odds of a 2023 recession increase from here.” Story at...
https://finance.yahoo.com/news/stock-market-week-ahead-federal-reserve-meeting-rate-hike-september-163807190.html
 
MARKET REPORT / ANALYSIS
-Monday the S&P 500 fell about 1% to 3655.
-VIX rose about 8% to 32.26.
-The yield on the 10-year Treasury jumped to 3.919%. (Wow...almost 4% on the 10-year. Ouch.)  
 
PULLBACK DATA:
-Drop from Top: 23.8% as of today. 23.8% max (on a closing basis).
-Trading Days since Top: 183-days.
The S&P 500 is 13.7% Below its 200-dMA & 9.4% Below its 50-dMA.
Support is around 3250, the lows of September 2020.
 
VIX WATCH: VIX is now about 32. At the bottom of the Financial Crisis in 2009 the VIX was 50 or so. During that bear market VIX hit 80 at one point. This doesn’t say for certain that this correction has a lot further to fall, but it does cause one to wonder.
 
*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.
Sold SDS – see Today’s Comment below.
I have built these positions to significantly large values, although I am still not net short.
 
TODAY’S COMMENT:
I saw a note that said that Fed Ex has now fallen more than 50% from its high.  That has only happened 3 times: 1991-92; 2008-09 and 2020. Stock market historians will note that those were troubling times for stock investors. FedEx is now down 52% from its high. The 3-prior 50%+ drawdowns all occurred during recessions. Iraq invaded Kuwait in 1990. 2008-09 was the housing crisis.  The Coronavirus recession was the shortest and the S&P 500 dropped about 24%. The 2008-09 crash caused the S&P 500 to lose 50% of its value. It doesn’t tell us how far current bear market will fall, but it does remind that conditions are not good now as if we needed another reminder. We may see retail sales drop when the next round of data is released in about 3 weeks.
 
Today the S&P 500 closed below the June low of 3667. It looked like the test was going to be a close call regarding a possible buy-signal.  The signal didn’t develop because the Index dropped lower at the close along with deteriorating market internals. No buy-signal today.
 
I was busy all day and didn’t follow the market. When I got home, I sold SDS late in the day since it looked like there might be a buy-signal.  Nope.  I may have sold SDS too soon, but maybe not.  The Index is down 5-days on a row so we may get an up-day or some sort of bounce soon. I will wait and buy back SDS later if conditions deteriorate further. I am still holding SH.
 
Today, the daily sum of 20 Indicators improved from -12 to -11 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations declined from -44 to -63. (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 SELL: VOLUME & VIX are bearish; SENTIMENT & PRICE are neutral. Remember for the longer-term, one indicator trumps them all – “Don’t fight the FED.”
 
I’m a Bear. I’ll be looking for a buying opportunity as markets drift lower, but I won’t guess when (or if) one may show up.
 
BEST ETFs - MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs (Ranked Daily)
None of the ETFs I track are above their 120-dMA so the chart is no good. ETF ranking follows:
#1 XLU; #2. XLV #3. IBB
*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.
My momentum chart for the Dow has blown up since all of the Dow stocks are below their 120-dMA. DOW 30 momentum ranking follows:
#1 MCD; #2. WMT #3. UNH
For more details, see NTSM Page at…
https://navigatethestockmarket.blogspot.com/p/a-system-for-trading-dow-30-stocks-my_8.html

MONDAY MARKET INTERNALS (NYSE DATA)

My basket of Market Internals remained SELL.
 
(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 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.
  

Best DOW Stocks ... Best ETFs … Stock Market Analysis ... Markit Composite PMI

 
“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
“Without authorization by Congress of a specific loan forgiveness program, the President does not have the authority to forgive student loan debt. As the U.S. Supreme Court ruled in Whitman v. American Trucking Assns., Inc., (531 USC 457, 2001), Congress does not “hide elephants in mouseholes.” For a full explanation, see...
https://thecollegeinvestor.com/35892/is-student-loan-forgiveness-by-executive-order-legal/
...but that didn’t stop Biden’s trillion-dollar (according to the Wharton Business School) give-away. Wouldn’t that be inflationary?
 
IHS MARKIT COMPOSITE PMI (S&P Global)
“The headline Flash US PMI Composite Output Index registered 49.3 in September, up from 44.6 in August, to signal a softer and only marginal decline in private sector business activity.” Press release at...
https://www.pmi.spglobal.com/Public/Home/PressRelease/df290cbcbcc941359da947c724460831
 
S&P 500 SEES THIRD LEG DOWN OF MORE THAN 10%. HERE’S THE HISTORY FROM BESPOKE (msn.com)
“The firm studied past bear markets during the post-World War II period that began at all-time highs and saw at least three legs down of 10% or more before the S&P 500 ultimately bottomed. Those began in January 1973, November 1980, August 1987, March 2000 and October 2007, according to Bespoke. If there was one consistent pattern within all five of the prior periods highlighted, it is that in every one, the S&P 500 made a lower low in its third leg lower,” Bespoke said. The S&P 500 is not far above its June low, “so either the market has further to fall,” or if the index can rally back to 4,250, “it would offer some faint hope to bulls that the worst of the declines would be behind us.”
S&P 500 sees its third leg down of more than 10%. Here’s what history shows about past bear markets hitting new lows from there, according to Bespoke. (msn.com)
 
INVERTED YIELD CURVE MEANS 2024 BOTTOM (McClellan Financia Publications)
“The Fed’s rate hiking at the short-term end of the maturity spectrum is outpacing the rise in long term yields, which is resulting in an inverted yield curve...Inverted yield curves have a perfect track record going back decades for predicting recessions.  So let not your heart be troubled about the question of whether we are going to have a recession.  We are for sure going to have one...The question we should still worry about, though, is what that means for the stock market, and the answer there is not as clear... Once we see a bottom in the 10-1 yield spread, then we can start anticipating an important stock market [bottom] about 22 months later." Commentary at...
https://www.mcoscillator.com/learning_center/weekly_chart/inverted_yield_curve_means_2024_bottom/
The Dot.com stock market crash took 3 years to go from top to bottom so this analysis is entirely possible, especially if the spread bottoms this year.
 
A 100 YEAR OLD MISCALCULATION DRAINED THE COLORADO RIVER (msn.com)
“...a key reason why the Colorado River is running out of water has more to do with math than anything — bad math. One hundred years ago, government officials divvied up water in the Colorado River among the seven states that rely on it including Arizona, California, Colorado, Nevada, New Mexico, Utah, and Wyoming. The agreement, known as the Colorado River Compact, was based on one critically important number: the total amount of water that the Colorado River can supply yearly. Ignoring the best science of the time, officials claimed the river could provide about 20 million acre-feet per year (an acre-foot is the amount of water needed to fill an acre with one foot of water), according to the 2021 book Science Be Dammed: How Ignoring Inconvenient Science Drained the Colorado River. That number was way too high, the authors write, meaning that officials promised states water that simply didn’t exist.
Story at... How a 100-year-old miscalculation drained the Colorado River (msn.com)
 
MARKET REPORT / ANALYSIS
-Friday the S&P 500 fell about 1.7% to 3693.
-VIX rose about 9% to 29.92.
-The yield on the 10-year Treasury slipped to 3.688%.  
 
PULLBACK DATA:
-Drop from Top: 23% as of today. 23.6% max (on a closing basis).
-Trading Days since Top: 181-days.
The S&P 500 is 12.9% Below its 200-dMA & 8.6% Below its 50-dMA.
Support is the prior low, 3667. It held today, but probably ot uch further.
 
*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 have built these positions to significantly large values, although I am still not net short.
 
TODAY’S COMMENT:
The S&P 500 fell below its June low of 3667, and climbed above that level after 3 pm. VIX is now about 30. At the bottom of the Financial Crisis in 2009 the VIX was 50 or so. During that bear market VIX hit 80 at one point. This doesn’t say for certain that this correction has a lot further to fall, but it does cause one to wonder.
 
Today’s volume was lower than back in June, but internals weren’t good; even if tday had been a lower-low, the test would not have been successful.  No bottom yet. I don’t have an estimate of the bottom.  The most likely range would be anywhere from 3650 to 3000.
 
On Fridays, I summarize a number of indicators to get a weekly feel for trend. The Friday rundown of indicators remained sharply bearish (23-bear and 4-bull). The bull-signs are from 2 types of indicators (1) Fosback signals, because new-highs are low, and (2) a couple of “oversold” indicators.  Markets can remain oversold for some time so we can’t put too much value in those. The Fosback indicators have been bullish for a while, but I think we need to see zero new-highs before we see a low on the S&P 500. These indicators tend to be both long-term and short-term, so they are different than the 20 that I report on daily. Details follow:
 
BULL SIGNS
-The longer-term, 50-dEMA, Fosback Hi-Low Logic Index is Bullish.
-Overbought/Oversold Index (Advance/Decline Ratio) is oversold.  
-Bollinger Bands.
-The S&P 500 is 12.9% below its 200-dMA. (Bull indicator is 12% below the 200-day, although this is based on “normal” pullbacks.)
 
NEUTRAL
-There have been 1 Statistically-Significant day (big moves in price-volume) in the last 15-days...neutral.
-The Calm-before-the-Storm/Panic Indicator warned on 13 September - expired.
-There have been 7 up-days over the last 20 sessions. – This works with sentiment. Sentiment is too high so this is neutral.
-There have been 3 up-days over the last 10 sessions – leaning bullish, but neutral.
-RSI
-Sentiment.
-Issues advancing on the NYSE (Breadth) compared to the S&P 500 now neutral.
-The size of up-moves has been smaller than the size of down-moves over the last month, but not enough to send a signal.
-The short-term, 10-day, Fosback Hi-Low Logic Index.
-There was an Inverse Zweig Breadth Collapse (negative Breadth Thrust) 21 June. That’s a rare, very-bearish sign, but it was several-weeks ago - expired.
-The 52-week, New-high/new-low ratio improved by 0.1 standard deviations on 19 Sep – too small to send a signal.
-There was a Hindenburg Omen signal 8 April – it was canceled when the McClellan Oscillator turned bullish.
-2.8% of all issues traded on the NYSE made new, 52-week highs when the S&P 500 made a new all-time-high, 3 January. (There is no bullish signal for this indicator.) This indicated that the advance was too narrow and a correction was likely to be >10%. – It proved correct, but is now Expired
 
BEAR SIGNS
-The smoothed advancing volume on the NYSE is falling.
-There have been 13 Distribution Days over the last 5 weeks.
-23 Sept was a bearish, >90%-down-volume day.
-The 10-dMA percentage of issues advancing on the NYSE (Breadth) is below 50%.
-The 50-dMA percentage of issues advancing on the NYSE (Breadth) is below 50.
-The 100-dMA percentage of issues advancing on the NYSE (Breadth) is below 50%
-The 50-dMA percentage of issues advancing on the NYSE (Breadth) has been below 50%, for 3 days in a row below 50% for my “correction-now” signal. – It hardly matters now.
-MACD of the percentage of issues advancing on the NYSE (breadth) made a bearish crossover 30 Aug.
-MACD of S&P 500 price made a bearish crossover 22 Aug.
-21 Sep was a Bearish Outside Reversal Day.
-Smoothed Buying Pressure minus Selling Pressure is falling.
-The 5-10-20 Timer System is SELL; the 5-dEMA and 10-dEMA are both below the 20-dEMA. (The 5-day is below the 10-day so short-term momentum is bearish too.)
-VIX is rising quickly.
-My Money Trend indicator is falling.
-McClellan Oscillator is negative.
-The Smart Money (late-day action) is down.
-The graph of the 100-day Count (the 100-day sum of up-days) is falling.
-Long-term new-high/new-low data.
-Short-term new-high/new-low data.
-Cyclical Industrials (XLI-ETF) are under-performing the S&P 500 and falling so I’ll call it bearish.
-Slope of the 40-dMA of New-highs is falling. This is one of my favorite trend indicators.
- 29% of the 15-ETFs that I track have been up over the last 10-days.
-S&P 500 is underperforming the Utilities (XLU).
 
On Friday, 21 February, 2 days after the top before the Coronavirus pullback, there were 10 bear-signs and 1 bull-sign. Now there are 23 bear-signs and 4-Bull. Last week, there were 20 bear-signs and 2 bull-signs. Friday indicators are still giving a  very bearish indication.
 
Today, the daily sum of 20 Indicators remained -12 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations declined from -31 to -44. (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 SELL: VOLUME & VIX are bearish; SENTIMENT & PRICE are neutral. I 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; a retest of the prior lows (or close to the lows) is near. A positive test would be indicated by lower volume and improved market internals.
 
I may cover short positions soon. We may see a bounce even if the retest fails or is inconclusive.
 
BEST ETFs - MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs (Ranked Daily)
None of the ETFs I track are above their 120-dMA so the chart is no good. ETF ranking follows:
#1 XLU; #2. XLE #3. IBB
*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
 
FRIDAY MARKET INTERNALS (NYSE DATA)

My basket of Market Internals remained SELL.
 
(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 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.