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“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.
 
Baldwin settles lawsuit: “A live round discharged from a gun held by Baldwin fatally wounded Halyna Hutchins on Oct. 21 last year.” – NBC News
https://www.nbcnews.com/news/crime-courts/alec-baldwin-settles-lawsuit-family-cinematographer-killed-rust-set-rcna50823
The gun, did it? Alec Baldwin was just “holding” the gun? He didn’t pull the trigger?
 
ADP EMPLOYMENT CHANGE (CNBC)
“The U.S. labor market showed strength in September, with private companies adding more jobs than expected, payroll services firm ADP reported Wednesday. Businesses added 208,000 for the month...
https://www.cnbc.com/2022/10/05/adp-jobs-report-september-2022.html
 
ISM NON-MANUFACTURING (ISM via prnewswire)
“Economic activity in the services sector grew in September for the 28th month in a row — with the Services PMI® registering 56.7 percent — say the nation's purchasing and supply executives in the latest Services ISM® Report On Business®.” Report at...
https://www.prnewswire.com/news-releases/services-pmi-at-56-7-september-2022-services-ism-report-on-business-301640833.html
The Index was down slightly from the previous week.
 
EIA CRUDE INVENTORIES (EIA)
“U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 1.4 million barrels from the previous week. At 429.2 million barrels, U.S. crude oil inventories are about 3% below the five year average for this time of year.” Report at...
https://ir.eia.gov/wpsr/wpsrsummary.pdf
 
OPEC TO CUT PRODUTION BY 2 MILLION BARRELS A DAY (Washington Advisor)
“The OPEC+ group of oil-producing nations agreed Wednesday to slash oil production by 2 million barrels per day as it seeks to stabilize global oil prices after months of decline, delivering a major blow to the Biden administration ahead of the midterm elections.... Futures for international benchmark Brent crude rose as high as $92.00 per barrel early Wednesday...” Story at...
https://www.washingtonexaminer.com/policy/energy-environment/opec-agrees-to-cut-oil-production-by-2m-barrels-a-day-putting-pressure-on-prices
My cmt: This is timed just before the U.S. starts to replenish its strategic petroleum reserves that Biden drained to its lowest point in history in an effort to lower gas prices.  Looks like the Saudis sent an FU to Biden and the U.S.
 
THE STOCK MARKET LIKELY JUST BOTTOMED (YahooFinance)
“The stock market has likely found its bottom this week and should stage a rally of up to 15% heading into year-end, Fundstrat's technical strategist Mark Newton told clients in a Monday note.” Story at...
https://finance.yahoo.com/news/stock-market-likely-just-bottomed-184702163.html
My cmt: Nice to see that someone agrees with me.
 
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 slipped about 0.2% to 3783.
-VIX declined about 2% to 28.55.
-The yield on the 10-year Treasury rose to 3.757%.
 
PULLBACK DATA:
-Drop from Top: 21.1% as of today. 25.2% max (on a closing basis).
-Trading Days since Top: 190-days.
-The S&P 500 is 9.9% Below its 200-dMA & 5.4% Below its 50-dMA.
Support is around 3585, the low of 5 October 2020.
 
*I won’t call the correction over until the S&P 500 makes a new-high; however, we may have seen the bottom, or at least near the bottom.
 
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.) I added significantly more SPY Tuesday.
IWM - Wilshire Russell 2000.
 
TODAY’S COMMENT:
There seem to be two schools of thought on the market. One says the bottom is in; the other says this is just a bear market rally, in part, fueled by short covering.
 
I’m in the “bottom is in” camp, though I’ll admit that a final bottom could always be a lower than the 16 June bottom of 3667 on the S&P 500. We can never really call the exact bottom, but the final low is likely to be in that 3667 area (probably not more than 5% below it). The other issue is that we don’t know if the markets will fall and retest that 3667 zone with new lower lows, or keep heading up.
 
It is fair to wonder why I am making a bottom-call when the consensus seems to be that a recession is coming and the S&P 500 will bottom around 3250 or lower.
 
When we look at the June lows compared to the retest last week, market internals were drastically improved.  On the 27 September retest, 52% of the NYSE volume was up-volume; 48% of issues were advancing on the NYSE; new-highs minus new-lows was -878.  Compare those numbers to 7% up-volume; 10% advancing issues and -1091 new-highs minus new-lows at the June low. We also saw much better numbers for buying-pressure minus selling-pressure and spreads between utilities and the S&P 500 on the retest.  

The bottom line is that when internals show significant improvement at new lows, the correction is usually over or nearly over. The numbers suggest that investors ARE buying, but they are buying stocks that aren’t moving the major indices - yet.
 
In the here and now, there were plenty of bullish signs: MACD of Price made a bullish cross today; my Money Trend indicator turned up and...
...today, the daily sum of 20 Indicators improved from +4 to +7 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations improved from -64 to -46. (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; SENTIMENT and PRICE are bullish; VOLUME is neutral. 
 
Bottom line: I’m a Bull; I’m now invested with about 65% invested in stocks. I’ll cut back to 50% if I see bearish indicators creep into the mix. I’ll add leveraged long positions (QLD, UWM) if we see a pullback to the prior lows. (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:
#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)
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:
#1CVX  #2.GS  #3.HD & UNH
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 improved, but 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.) 
 
 

...My current invested position is about 65% stocks, including stock mutual funds and ETFs. I’m usually about 50% invested in stocks. I’ll cut back on stocks if we see bear signs increasing.
 
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.