“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
My cmt: Marjorie Greene...what a nut case. Yes, Alex Jones had freedom of speech to speak his mind; however, words can cause harm and those damaged have a right to redress. (That’s what libel laws are about.) In this case, Alex Jones caused extreme damage to others by broadcasting outrageous lies that the Sandy Hook massacre was fake. He inflamed his extremist followers to harass and threaten parents of dead children.
THE FED RISKS DRIVING THE ECONOMY INTO A DITCH
(MarketWatch via msn.com)
“To monitor their progress on bringing inflation back down to the 2% target, the Fed is monitoring the economic data, with a particular focus on wages, the unemployment rate, and the PCE and the consumer price indexes.
The problem is, these statistics are all lagging indicators. They tell us more about where we’ve been than where we are going...The loss of credibility is the true existential crisis of the moment for central bankers. They know they have to bring down inflation or their institutions will not survive in their current form. They also know that the only sure way they know to do that is to crash the economy into the ditch.” – Rex Nutting, Columnist for MarketWatch. Commentary at...
The Federal Reserve risks driving the economy into a ditch because it’s not looking at where inflation is heading (msn.com)
My cmt: The article says that money supply is a major cause of inflation and it was climbing at 66% in 2020. It is falling at a 4% rate now, the first continuing decline since 2010. Makes one wonder if something will break.
CPI (CNBC)
“The consumer price index increased 0.4% for the month, more than the 0.3% Dow Jones estimate, according to the Bureau of Labor Statistics. On a 12-month basis, so-called headline inflation was up 8.2%, off its peak around 9% in June but still hovering near the highest levels since the early 1980s...Core inflation was up 6.6% from a year ago, the biggest 12-month gain since August 1982.” Story AT...
https://www.cnbc.com/2022/10/13/consumer-price-index-september-2022-.html
JOBLESS CLAIMS (YahooNews)
“Initial claims for state unemployment benefits rose 9,000 to a seasonally adjusted 228,000 for the week ended Oct. 8. Unadjusted claims jumped 32,275 to 199,662. Applications surged by 10,368 in Florida. There were also big increases in filings in New York, California and Texas, while claims in Puerto Rico remained elevated in the aftermath of Hurricane Fiona.” Story at...
https://news.yahoo.com/u-consumer-prices-increase-more-124646897.html
EIA CRUDE INVENTORIES (EIA)
“U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 9.9 million barrels from the previous week. At 439.1 million barrels, U.S. crude oil inventories are about 1% below the five year average for this time of year.” Report at...
https://www.eia.gov/petroleum/supply/weekly/pdf/wpsrall.pdf
With inventories rising, prices should fall.
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 rose about 2.6% to 3670.
-VIX dipped about 5% to 31.94.
-The yield on the 10-year Treasury climbed to 3.945%.
PULLBACK DATA:
-Drop from Top: 23.5% as of today. 25.4% max (on a closing basis).
-Trading Days since Top: 196-days.
The S&P 500 is 11.9% Below its 200-dMA & 7% Below its 50-dMA.
*I won’t call the correction over until the S&P 500 makes a new-high; however, evidence suggests the bottom was in the 3600 area and I am fully invested with a higher percentage of stocks than normal.
MY TRADING POSITIONS:
DDM – 2x Dow 30
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.)
IWM - Russell 2000. (I may hold this as a long-term position.)
TODAY’S COMMENT:
As I wrote earlier today, when bad news is met by a strong move higher in markets, we interpret it as a very bullish sign. We also note that today was a bullish Outside Reversal Day.
“An outside reversal is a price pattern that indicates a potential change in trend on a price chart. The two-day pattern is observed when a security’s high and low prices for the day exceed the high and low of the previous day’s trading session.” From...
https://www.investopedia.com/terms/o/outsidereversal.asp#:~:text=What%20Is%20an%20Outside%20Reversal,the%20previous%20day%27s%20trading%20session.
That pattern is also known as a bullish engulfing pattern to the chartists. We’ve seen bearish reversals in August and September; this is the first bullish reversal signal since 1 July. That signal presaged a 13% rally in the S&P 500. Based on my bottom analysis, it appears that this time it may be signaling a more significant move higher – my “time to buy” signal was triggered on 27 September with the warning that the S&P 500 might fall below the 27 Sept close, but probably not more than 5% below it. The Index did close about 2% below the 27 September low. Today’s move suggests we may not dip below the lows again.
MACD of S&P 500 price gave a buy signal today with a
bullish crossover of the signal line.
Volumes have been declining since the 30 Sept low
suggesting a slowdown in selling and tending to confirm that the bottom might
have been in the vicinity of 3600 on the S&P 500. This has continued to
support the position that the best move is to “buy-the-dip.” Today volume
bounced back to about 5% above the monthly average. Further, 80% of the volume was up-volume. Another
strong 80%+ up-volume day Friday would be a bullish sign, lending more evidence
that 12 October was the final bottom.
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. I wouldn’t worry about it this
time. We could see some profit taking Friday,
but after a bottom we can often see several statistically significant up-days
before momentum slips, but not necessarily on consecutive days.
I added a leveraged long position, DDM (2xDow), because
of today’s strong bullish signs. The Dow was outperforming other Indices today,
so it seemed the logical choice.
Today, the daily sum of 20 Indicators improved from -3 to
+6 (a positive number is bullish; negatives are bearish); the 10-day smoothed
sum that smooths the daily fluctuations improved from +25 to +35. (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 to HOLD: VIX is bearish; PRICE is bullish; VOLUME & SENTIMENT are neutral.
Bottom line: I’m a Bull: I’m now invested with about 70% of
the portfolio invested in stocks. I added a leveraged long position (DDM – 2xDow)
13 Oct based on strong bullish signs. (As a retiree, 50% invested in stocks is
my “normal” portfolio.)
BEST ETFs - MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs (Ranked Daily)
ETF ranking follows:
The top ranked ETF receives 100%. The rest are then ranked based on their momentum relative to the leading ETF.
#1. XLE #2. IBB #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)
DOW 30 momentum ranking follows:
#1. AMGN #2. MRK #3. CVX
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
THURSDAY MARKET INTERNALS
(NYSE DATA)
My basket of Market Internals improved to 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.)
...My current invested
position is about 70% stocks, including stock mutual funds and ETFs. I’m
usually about 50% invested in stocks. I’ll cut back on stocks if we see serious
bear signs.
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.
“To monitor their progress on bringing inflation back down to the 2% target, the Fed is monitoring the economic data, with a particular focus on wages, the unemployment rate, and the PCE and the consumer price indexes.
The problem is, these statistics are all lagging indicators. They tell us more about where we’ve been than where we are going...The loss of credibility is the true existential crisis of the moment for central bankers. They know they have to bring down inflation or their institutions will not survive in their current form. They also know that the only sure way they know to do that is to crash the economy into the ditch.” – Rex Nutting, Columnist for MarketWatch. Commentary at...
The Federal Reserve risks driving the economy into a ditch because it’s not looking at where inflation is heading (msn.com)
My cmt: The article says that money supply is a major cause of inflation and it was climbing at 66% in 2020. It is falling at a 4% rate now, the first continuing decline since 2010. Makes one wonder if something will break.
“The consumer price index increased 0.4% for the month, more than the 0.3% Dow Jones estimate, according to the Bureau of Labor Statistics. On a 12-month basis, so-called headline inflation was up 8.2%, off its peak around 9% in June but still hovering near the highest levels since the early 1980s...Core inflation was up 6.6% from a year ago, the biggest 12-month gain since August 1982.” Story AT...
https://www.cnbc.com/2022/10/13/consumer-price-index-september-2022-.html
“Initial claims for state unemployment benefits rose 9,000 to a seasonally adjusted 228,000 for the week ended Oct. 8. Unadjusted claims jumped 32,275 to 199,662. Applications surged by 10,368 in Florida. There were also big increases in filings in New York, California and Texas, while claims in Puerto Rico remained elevated in the aftermath of Hurricane Fiona.” Story at...
https://news.yahoo.com/u-consumer-prices-increase-more-124646897.html
“U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 9.9 million barrels from the previous week. At 439.1 million barrels, U.S. crude oil inventories are about 1% below the five year average for this time of year.” Report at...
https://www.eia.gov/petroleum/supply/weekly/pdf/wpsrall.pdf
With inventories rising, prices should fall.
-Thursday the S&P 500 rose about 2.6% to 3670.
-VIX dipped about 5% to 31.94.
-The yield on the 10-year Treasury climbed to 3.945%.
-Drop from Top: 23.5% as of today. 25.4% max (on a closing basis).
-Trading Days since Top: 196-days.
The S&P 500 is 11.9% Below its 200-dMA & 7% Below its 50-dMA.
*I won’t call the correction over until the S&P 500 makes a new-high; however, evidence suggests the bottom was in the 3600 area and I am fully invested with a higher percentage of stocks than normal.
DDM – 2x Dow 30
SPY – S&P 500 (I may hold this as a long-term position.)
IWM - Russell 2000. (I may hold this as a long-term position.)
As I wrote earlier today, when bad news is met by a strong move higher in markets, we interpret it as a very bullish sign. We also note that today was a bullish Outside Reversal Day.
“An outside reversal is a price pattern that indicates a potential change in trend on a price chart. The two-day pattern is observed when a security’s high and low prices for the day exceed the high and low of the previous day’s trading session.” From...
https://www.investopedia.com/terms/o/outsidereversal.asp#:~:text=What%20Is%20an%20Outside%20Reversal,the%20previous%20day%27s%20trading%20session.
That pattern is also known as a bullish engulfing pattern to the chartists. We’ve seen bearish reversals in August and September; this is the first bullish reversal signal since 1 July. That signal presaged a 13% rally in the S&P 500. Based on my bottom analysis, it appears that this time it may be signaling a more significant move higher – my “time to buy” signal was triggered on 27 September with the warning that the S&P 500 might fall below the 27 Sept close, but probably not more than 5% below it. The Index did close about 2% below the 27 September low. Today’s move suggests we may not dip below the lows again.
TODAY’S RANKING OF 15 ETFs (Ranked Daily)
ETF ranking follows:
The top ranked ETF receives 100%. The rest are then ranked based on their momentum relative to the leading ETF.
#1. XLE #2. IBB #3. XLV
http://navigatethestockmarket.blogspot.com/p/exchange-traded-funds-etf-ranking.html
DOW 30 momentum ranking follows:
#1. AMGN #2. MRK #3. CVX
For more details, see NTSM Page at…
https://navigatethestockmarket.blogspot.com/p/a-system-for-trading-dow-30-stocks-my_8.html
(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.)
