Best DOW Stocks ... Best ETFs … Stock Market Analysis ...

 
“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
MARKET TRADING UPDATE (RIA)
“The market finally rallied from oversold conditions and, importantly, held important support...With the 100-dma very close to crossing below the 50-dma, there is a good bit of resistance at the 4000 level on the S&P 500 index. That level is likely a good place to take profits and rebalance portfolios in the near term as the Fed continues to hike rates and tighten monetary policies... Don’t forget to sell into the rally.” Commentary at...
https://realinvestmentadvice.com/insights/daily-market-commentary/
 
RAINBOW CONVERGENCE AND HEAD AND SHOULDERS PATTERN (McClellan Financial Publications)

“It is pretty clear by now that the September 6, 2022 low was a textbook example of a Type 1 rainbow convergence [and a head and shoulders pattern].  Prices bottomed on the exact day that the four moving average type lines converged.  The message of a Type 1 is that prices should pause, meaning that the downtrend is on hold for a while...So we should expect to see a few days’ worth of a pause in the downtrend, while that test process gets worked out.” – Tom McClellan.  Charts and commentary at...
https://www.mcoscillator.com/learning_center/weekly_chart/a_rainbow_convergence_and_a_head_and_shoulders/
 
MARKET REPORT / ANALYSIS
-Friday the S&P 500 rose about 1.5% to 4067.
-VIX fell about 3% to 22.79.
-The yield on the 10-year Treasury slipped to 3.314%.  
 
PULLBACK DATA:
-Drop from Top: 15.2% as of today. 23.6% max.
-Trading Days since Top: 172-days.
The S&P 500 is 4.9% Below its 200-dMA & 0.9% 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:
On Fridays, I summarize a number of indicators to get a weekly feel for trend. The Friday rundown of indicators improved (12-bear and 10-bull), but remains leaning bearish. 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 smoothed advancing volume on the NYSE is rising.
-9 Sept was a bullish, 90%-up-volume day.
-The 50-dMA percentage of issues advancing on the NYSE (Breadth) is above 50.
-My Money Trend indicator is rising.
-Long-term new-high/new-low data.
-Short-term new-high/new-low data.
-Overbought/Oversold Index (Advance/Decline Ratio).  
-The longer-term, 50-dEMA, Fosback Hi-Low Logic Index is Bullish.
-Slope of the 40-dMA of New-highs is rising, but just barely. This is one of my favorite trend indicators.
-The graph of the 100-day Count (the 100-day sum of up-days) is rising.
 
NEUTRAL
-There have been 3 Statistically-Significant day (big moves in price-volume) in the last 15-days...neutral.
-Sentiment.
-The 50-dMA percentage of issues advancing on the NYSE (Breadth) is above 50%. (3 days in a row below 50% is my “correction-now” signal)
-Bollinger Bands.
-RSI
-Issues advancing on the NYSE (Breadth) compared to the S&P 500 now neutral.
-McClellan Oscillator is negative.
-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 Calm-before-the-Storm/Panic Indicator.
-The short-term, 10-day, Fosback Hi-Low Logic Index.
-There have been 10 up-days over the last 20 sessions –neutral.
-There have been 4 up-days over the last 10 sessions – neutral.
-VIX.
-The S&P 500 is 8.5% below its 200-dMA. (Bull indicator is 12% below the 200-day, although this is based on “normal” pullbacks.)
-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.
-The 52-week, New-high/new-low ratio improved by 0.7 standard deviations on 15 July – 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 10-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%
-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.
-26 Aug 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.)
-Cyclical Industrials (XLI-ETF) are out-performing the S&P 500, but falling sharply so I’ll call it bearish.
-There have been 6 Distribution Days over the last 3 weeks.
-The Smart Money (late-day action) is down.
-S&P 500 is underperforming the Utilities (XLU).
-Only 39% 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 12 bear-signs and 10-Bull. Last week, there were 15 bear-signs and 6 bull-signs. Friday indicators improved but are now about neutral.
 
The chart is suggesting that this rally may be over: the Index closed at the upper trend line from the 16 August recent high.
 
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 16-days, but we have seen 4 straight up-days, so the selling may be over? Given the chart issue I moted above, I suspect we return to selling soon.
 
Today, the daily sum of 20 Indicators declined from +1 to zero (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations remaiined +3. (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.”
 
I’m a Bear; a retest of the prior lows (or close to the lows) seems very 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
 
FRIDAY 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.