“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.
“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
“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
“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
-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.)
-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.
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.
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.
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)
