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“We are experiencing a near total failure of leadership in our country. Politicians on both sides are fueling rage for personal and political advantage. It is a dangerous and craven form of demagoguery. James Freeman Clarke once said that “a politician thinks of the next election; a statesman thinks of the next generation.” We have far too many politicians today and far too few statesmen at an increasingly perilous time for our country.” – Jonathan Turley, Shapiro Chair for Public Interest Law at the George Washington University Law School. From...
https://jonathanturley.org/2022/09/08/a-dangerous-escalation-fifty-six-percent-of-voters-president-biden-sought-to-incite-conflict/#more-193577
 

Political commentary at...
https://michaelpramirez.com/index.html
 
FRIDAY TRADING UPDATE FROM REAL INVESTMENT ADVICE (RIA)
“We need to act now, forthrightly, strongly as we have been doing. It is very important that inflation expectations remain anchored. What we hope to achieve is a period of growth below trend.” – Fed Chair, Jerome Powell.
“That last sentence is the most important. If the Fed is pushing or is at least comfortable with below-trend growth, that means that earnings growth will, by extension, be below trend. As noted, the markets have not fully priced in slower earnings growth, much less an earnings recession.
https://realinvestmentadvice.com/insights/daily-market-commentary/
 
EXPECT 20% DROP BY MID-OCTOBER (msn.com)
“Since 1960, P/Es have trended lower when #inflation is higher. With YoY core PCE now at 4.6% and S&P500 trading at ~19x, we should see stocks fall another 20% by mid-October…if historical seasonals mean anything.”- Scott Minerd, Global Chief Investment Officer, Guggenheim Partners, tweet.

 I wouldn’t be surprised at another 20% drop, but I remember Minerd’s call that there would certainly be a retest of the low during the Coronavirus correction. It was among the worst calls made by a professional investor during Coronavirus correction.
The stock market is poised for a swift 20% sell-off by mid-October with recession increasingly likely, Guggenheim's Scott Minerd says (msn.com)
 
EXPECT A “SIGNIFICANT” RATE HIKE FROM THE FED (YahooFinance)
“Federal Reserve Governor Christopher Waller said he favors “another significant” increase in interest rates when the central bank meets later this month, signaling his backing for a 75 basis-point move. Inflation is far too high, and it is too soon to say whether inflation is moving meaningfully and persistently downward,” Waller said in the text of his remarks to the Institute for Advanced Studies in Vienna, Austria.” Story at...
https://finance.yahoo.com/news/fed-waller-favors-another-significant-161409733.html
 
THE TESLA SECRET (WSJ)
“Wall Street is narrowly focused on Tesla’s stock price, the press on a brainless debate about whether electric cars are good or very, very good. But try listening to Elon Musk. Last quarter the company lost $100 million on electric cars and reported a profit thanks to $400 million in mandated government gifts from other car makers...” Story at... 
https://www.wsj.com/articles/the-tesla-secret-11596582407?mod=article_inline
 
POLICIES PUSHING ELECTRIC VEHICLES SHOW WHY FEW PEOPLE WANT ONE (WSJ)
“We constantly hear that electric cars are the future—cleaner, cheaper and better. But if they’re so good, why does California need to ban gasoline-powered cars? Why does the world spend $30 billion a year subsidizing electric ones?...The climate effect of our electric-car efforts in the 2020s will be trivial. If every country achieved its stated ambitious electric-vehicle targets by 2030, the world would save 231 million tons of CO2 emissions. Plugging these savings into the standard United Nations Climate Panel model, that comes to a reduction of 0.0002 degree Fahrenheit by the end of the century...Electric vehicles will take over the market only if innovation makes them actually better and cheaper than gasoline-powered cars. Politicians are spending hundreds of billions of dollars and keeping consumers from the cars they want for virtually no climate benefit.” – Bjorn Lomborg, president of the Copenhagen Consensus, a visiting fellow at Stanford University’s Hoover Institution and author of “False Alarm: How Climate Change Panic Costs Us Trillions, Hurts the Poor, and Fails to Fix the Planet.” Opinion at...
https://www.wsj.com/articles/policies-pushing-electric-vehicles-show-why-few-people-want-one-cars-clean-energy-gasoline-emissions-co2-carbon-electricity-11662746452
 
MARKET REPORT / ANALYSIS
-Monday the S&P 500 rose about 1.1% to 4110.
-VIX bucked its normal trend and rose about 5% to 23.87. (The Options Gang may think the rally is over.)
-The yield on the 10-year Treasury rose to 3.358%.  
 
PULLBACK DATA:
-Drop from Top: 14.3% as of today. 23.6% max.
-Trading Days since Top: 173-days.
The S&P 500 is 3.8% Below its 200-dMA & 1.8% Above its 50-dMA & 100-dMA.
The 200-dMA is now resistance.
 
*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:
 
UTILITIES VS THE S&P 500 SINCE THE JUNE LOW

Chart from YahooFinance. 
 
The above chart says a lot.  Utilities, the defensive trade, are outperforming the S&P 500 by nearly 10% since the June lows.  In a healthy market, that should not happen.  This indicates that investors are very worried.  I think it also suggests new-lows are in the cards. Utilities would not get a bid if there was an ongoing bull-market.
 
Today, there was high unchanged-volume. As I’ve often said, many believe that this indicator suggests investor confusion at market turning points. Recent history shows this indicator has indicated a reversal of some kind, either now, or near future. My problem has always been that it is frequently a false signal. If the indicator is sending a decent signal, it is suggesting a reversal down. It certainly wouldn’t be a surprise to see markets fail here. The last time we saw high unchanged-volume was at the recent top on 16 August. Markets fell sharply then.
 
I think we remain in a selling stampede. We noted earlier that selling stampedes usually last 17 – 25 sessions, with only 1.5-to three-day pauses/throwback rallies, before they exhaust themselves on the downside. As of today, (if I am correct) this stampede down has lasted 17-days, but today was the fourth straight up-day (sorry, not Friday), so the selling may be over? I suspect we return to selling soon.
 
Friday, the CNBC Fast Money committee was of the opinion that CPI would fall sharply due to lower fuel prices weve been seeing.  Since that is expected, a fall in CPI would not be particularly bullish, according to them.  On the  other hand, a surprise to the upside would be very bearish. We’ll find out tomorrow; CPI data will be released at 8:30 AM.
 
Today, the daily sum of 20 Indicators improved from +1 to +8 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations improved from +4 to +17. (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: SENTIMENT is bullish; PRICE, VOLUME & VIX 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) seems likely.
 
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

MONDAY MARKET INTERNALS (NYSE DATA)

My basket of Market Internals remained NEUTRAL.
 
(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.