“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
“For decades we disagreed with [Supreme] Court rulings
when progressives held sway, but we never called the Court illegitimate. But
now that the left has lost the Court as a backup legislature for its policy
goals, the institution is supposedly broken. Tell us again who is the threat to
democratic institutions?” – WSJ Editorial Board.
"13.48% of stocks closed above their 200-day moving
average yesterday [30 October 2022]. Bottom in 2009 was 1.2%.
Bottom in 2020 was 2.8%.” - Michael “Big Short” Burry, Scion Asset
Management.
ISM MANUFACTURING (ISM via prnewswire.com)
“Economic activity in the manufacturing sector grew in September, with the overall economy achieving a 28th consecutive month of growth, say the nation's supply executives in the latest Manufacturing ISM® Report On Business®..."The September Manufacturing PMI® registered 50.9 percent, 1.9 percentage points lower than the 52.8 percent recorded in August. This figure indicates expansion in the overall economy for the 28th month in a row after contraction in April and May 2020...The New Orders Index returned to contraction territory at 47.1 percent, 4.2 percentage points lower than the 51.3 percent recorded in August...
“Economic activity in the manufacturing sector grew in September, with the overall economy achieving a 28th consecutive month of growth, say the nation's supply executives in the latest Manufacturing ISM® Report On Business®..."The September Manufacturing PMI® registered 50.9 percent, 1.9 percentage points lower than the 52.8 percent recorded in August. This figure indicates expansion in the overall economy for the 28th month in a row after contraction in April and May 2020...The New Orders Index returned to contraction territory at 47.1 percent, 4.2 percentage points lower than the 51.3 percent recorded in August...
..."The U.S. manufacturing sector
continues to expand, but at the lowest rate since the pandemic recovery began.
Following four straight months of panelists' companies reporting softening new
orders rates, the September index reading reflects companies adjusting to
potential future lower demand.” Press release at...
https://www.prnewswire.com/news-releases/manufacturing-pmi-at-50-9-september-2022-manufacturing-ism-report-on-business-301638361.html
This was seen as good news because investors hope it will cause the FED to slow rate hikes; that seems very doubtful. It will be some time before the economy slows enough to bring inflation down.
CONSTRUCTION SPENDING (YahooFinance)
“U.S. construction spending fell by the most in 1-1/2 years in August, pulled down by a sharp decline in outlays on single-family homebuilding amid surging mortgage rates. The Commerce Department said on Monday that construction spending dropped 0.7% in August...” Story at...
https://finance.yahoo.com/news/u-construction-spending-posts-biggest-142846000.html
STOCKS ARE SUSCEPTIBLE TO A WATERFALL DECLINE
(CiovaccoCapital)
“It’s good to know that many Bear markets conclude in October [but]...It is rare to see a quarterly inverted hammer [a chart term for a close at the bottom of the daily range]...the only one similar [since 1992]...was in 2008.” – Chris Ciovacco.
Powerpoint Commentary at...
https://www.youtube.com/watch?v=srkkpcucAjQ
The chart shows the waterfall decline after the “inverted hammer” chart warning back in 2008 and points out the recent similar sign. The presentation notes that there is also a possibility the markets will bounce higher and ignore the chart signal.
MARKET REPORT / ANALYSIS
-Monday the S&P 500 rose about 2.6% to 3678.
-VIX declined about 5% to 30.10.
-The yield on the 10-year Treasury slipped to 3.644%.
PULLBACK DATA:
-Drop from Top: 23.3% as of today. 25.2% max (on a closing basis).
-Trading Days since Top: 188-days.
The S&P 500 is 12.6% Below its 200-dMA & 8.2% 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 may hold this as a long-term position. I already owned a small position in CVX.)
SPY – S&P 500 (I may hold this as a long-term position. )
TODAY’S COMMENT:
Regarding the Ciovacco presentation noted above, I’d be very surprised if there isn’t a waterfall decline. As declines continue, eventually, many investors will decide to get out of the stock market. That “panic” will cause a steep, waterfall drop leading to a bottom that is usually very close to the final bottom. Corrections don’t always have a waterfall phase, but it seems to me that larger corrections and bear markets usually do have waterfall declines. We’ll see.
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.
Today, the daily sum of 20 Indicators improved from -2 to
-1 (a positive number is bullish; negatives are bearish); the 10-day smoothed
sum that smooths the daily fluctuations improved from -80 to -77. (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 improved to HOLD: VOLUME & VIX are bearish; SENTIMENT
is bullish; PRICE is neutral. I must
admit I remain somewhat confused about my Sentiment indicator. Sentiment bottomed during the Dotcom crash (2002)
somewhere in the neighborhood of 15%-Bulls. Now, Sentiment is 76%-bulls. That is a bullish number only because it is
based on standard deviation and seems to work on smaller corrections. I am
suspicious that the std-deviation won’t fall fast enough and I will get false bullish
signals from this indicator. All I can do is watch this and adjust if
necessary.
Remember for the longer-term,
one indicator trumps them all – “Don’t fight the FED.”
Bottom line: I’m a skeptical, short-term Bull; I bought
some stocks Wednesday of last week and I’m back to about 35% invested in
stocks. Looking at the chart a 5% bounce seems possible up to about 3850, or so.
Longer-term, I remain a Bear. My guess is that the waterfall decline that Chris
Ciovacco discussed is in our future.
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.XLE #3.XLV
*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.)
https://www.prnewswire.com/news-releases/manufacturing-pmi-at-50-9-september-2022-manufacturing-ism-report-on-business-301638361.html
This was seen as good news because investors hope it will cause the FED to slow rate hikes; that seems very doubtful. It will be some time before the economy slows enough to bring inflation down.
“U.S. construction spending fell by the most in 1-1/2 years in August, pulled down by a sharp decline in outlays on single-family homebuilding amid surging mortgage rates. The Commerce Department said on Monday that construction spending dropped 0.7% in August...” Story at...
https://finance.yahoo.com/news/u-construction-spending-posts-biggest-142846000.html
“It’s good to know that many Bear markets conclude in October [but]...It is rare to see a quarterly inverted hammer [a chart term for a close at the bottom of the daily range]...the only one similar [since 1992]...was in 2008.” – Chris Ciovacco.
https://www.youtube.com/watch?v=srkkpcucAjQ
The chart shows the waterfall decline after the “inverted hammer” chart warning back in 2008 and points out the recent similar sign. The presentation notes that there is also a possibility the markets will bounce higher and ignore the chart signal.
-Monday the S&P 500 rose about 2.6% to 3678.
-VIX declined about 5% to 30.10.
-The yield on the 10-year Treasury slipped to 3.644%.
-Drop from Top: 23.3% as of today. 25.2% max (on a closing basis).
-Trading Days since Top: 188-days.
The S&P 500 is 12.6% Below its 200-dMA & 8.2% Below its 50-dMA.
Support is around 3250, the lows of September 2020.
CVX – (I may hold this as a long-term position. I already owned a small position in CVX.)
SPY – S&P 500 (I may hold this as a long-term position. )
Regarding the Ciovacco presentation noted above, I’d be very surprised if there isn’t a waterfall decline. As declines continue, eventually, many investors will decide to get out of the stock market. That “panic” will cause a steep, waterfall drop leading to a bottom that is usually very close to the final bottom. Corrections don’t always have a waterfall phase, but it seems to me that larger corrections and bear markets usually do have waterfall declines. We’ll see.
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.XLE #3.XLV
*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.
