“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
“...[T]he increase in the policy rate and the reduction
in the balance sheet should help bring demand into alignment with supply.
Monetary policy will need to be restrictive for some time to provide confidence
that inflation is moving down to target.” Federal Reserve Vice Chair Lael
Brainard at the Clearing House and Bank Policy Institute 2022 Annual Conference.
Text of speech here...
https://www.federalreserve.gov/newsevents/speech/brainard20220907a.htm
FED BEIGE BOOK (Bloomberg)
“The Federal Reserve said US economic growth prospects were weak and set to slump further over the next year, while price growth showed signs of decelerating. ‘The outlook for future economic growth remained generally weak, with contacts noting expectations for further softening of demand over the next six to twelve months,’ the Fed said Wednesday in its Beige Book report, typically published two weeks before each meeting of the policy-setting Federal Open Market Committee.” Story at...
https://www.bloomberg.com/news/articles/2022-09-07/fed-report-shows-weak-us-growth-outlook-amid-inflation-cooling
COWBOYS FOR TRUMP FOUNDER REMOVED & BARRED FROM
HOLDING FUTURE PUBLIC OFFICE (CNBC)
“A judge in New Mexico declared Tuesday that the Jan. 6 Capitol riot was an “insurrection” as he ruled that Otero County Commissioner and “Cowboys for Trump” founder Couy Griffin must be removed from office for participating in the attack... Mathew’s ruling also marks the first time since 1869 that a court has disqualified a public official under Section 3 of the 14th Amendment...” Story at...
https://www.cnbc.com/2022/09/06/judge-calls-jan-6-an-insurrection-bars-cowboys-for-trump-founder-from-office.html
My cmt: This is an interesting ruling. Griffin was convicted of a misdemeanor, but this judge called it an insurrection. If it survives appeals, it could provide a path for the courts to bar Trump from office. Realistically, for that to happen I suspect that Trump will have to be tied more closely to actions of the protestors who attempted to block Congress’ certification of the election. It begs the question, “Was Trump’s effort to certify false electoral college members an “insurrection?”
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 rose about 1.8% to 3980.
-VIX fell about 8% to 26.64.
-The yield on the 10-year Treasury slipped to 3.267%.
PULLBACK DATA:
-Drop from Top: 17% as of today. 23.6% max.
-Trading Days since Top: 170-days.
The S&P 500 is 7.1% Below its 200-dMA & 1% Below its 50-dMA.
- Support points for the rally are around 3900, the early July highs (pretty much where we closed today) and the prior correction low of 3667. We should test the prior correction low.
*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:
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, up-day is followed by a down-day about 60% of the time. Statistically-significant, up-days almost always coincide with tops, but not all statistically-significant, up-days occur at tops. Today could be a top, but there are no top indicators warning and that is not what the bears want to see.
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, this stampede down has lasted 14-days. There’s probably more to come after
this small bounce is exhausted.
RSI and Advance/decline ratio are both still oversold so
we could see the move up continue for a bit. The S&P 500 could trade up to
its 50-dMA (4022) and/or the 100-dMA (4038). After that, I think the markets return
to selling.
Today, the daily sum of 20 Indicators declined from +6 to
+3 (a positive number is bullish; negatives are bearish); the 10-day smoothed
sum that smooths the daily fluctuations improved from -1 to +1. (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, SENTIMENT & VIX are neutral;
VOLUME is bearish. 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.”
So, you’d think that the bear was over based on today’s
big move up. All was not well though; Utilities were up 3.1%, the highest move
for any of the S&P 500 Sectors. That’s
not a good sign. In a healthy market, Utilities should not move up nearly double
the S&P 500.
I’m a Bear; a retest of the prior lows (or close to the
lows) seems very likely now.
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
WEDNESDAY 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.)
https://www.federalreserve.gov/newsevents/speech/brainard20220907a.htm
“The Federal Reserve said US economic growth prospects were weak and set to slump further over the next year, while price growth showed signs of decelerating. ‘The outlook for future economic growth remained generally weak, with contacts noting expectations for further softening of demand over the next six to twelve months,’ the Fed said Wednesday in its Beige Book report, typically published two weeks before each meeting of the policy-setting Federal Open Market Committee.” Story at...
https://www.bloomberg.com/news/articles/2022-09-07/fed-report-shows-weak-us-growth-outlook-amid-inflation-cooling
“A judge in New Mexico declared Tuesday that the Jan. 6 Capitol riot was an “insurrection” as he ruled that Otero County Commissioner and “Cowboys for Trump” founder Couy Griffin must be removed from office for participating in the attack... Mathew’s ruling also marks the first time since 1869 that a court has disqualified a public official under Section 3 of the 14th Amendment...” Story at...
https://www.cnbc.com/2022/09/06/judge-calls-jan-6-an-insurrection-bars-cowboys-for-trump-founder-from-office.html
My cmt: This is an interesting ruling. Griffin was convicted of a misdemeanor, but this judge called it an insurrection. If it survives appeals, it could provide a path for the courts to bar Trump from office. Realistically, for that to happen I suspect that Trump will have to be tied more closely to actions of the protestors who attempted to block Congress’ certification of the election. It begs the question, “Was Trump’s effort to certify false electoral college members an “insurrection?”
-Wednesday the S&P 500 rose about 1.8% to 3980.
-VIX fell about 8% to 26.64.
-The yield on the 10-year Treasury slipped to 3.267%.
-Drop from Top: 17% as of today. 23.6% max.
-Trading Days since Top: 170-days.
The S&P 500 is 7.1% Below its 200-dMA & 1% Below its 50-dMA.
- Support points for the rally are around 3900, the early July highs (pretty much where we closed today) and the prior correction low of 3667. We should test the prior correction low.
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 was a statistically significant up-day. That just means that the price-volume move exceeded my statistical parameters. Statistics show that a statistically-significant, up-day is followed by a down-day about 60% of the time. Statistically-significant, up-days almost always coincide with tops, but not all statistically-significant, up-days occur at tops. Today could be a top, but there are no top indicators warning and that is not what the bears want to see.
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
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
