Best DOW Stocks ... Best ETFs … Stock Market Analysis ... ISM Non-Manufacturing ... Factory Orders

 
“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
"The world is laughing at the United States of America and its corrupt and rigged Presidential Election of 2020!... "UNPRECEDENTED FRAUD REQUIRES UNPRECEDENTED CURE!" – Donald Trump.
My cmt: I can’t believe I actually voted for this clown.  Trump belongs in jail for his seditious false election claims and his attempts to install phony electors in the electoral college. He’s the one guilty of fraud, yet he continues to claim “stolen election” without providing a shred of evidence.
 
ISM NON-MANUFACTURING (ISM)
“Economic activity in the services sector grew in November for the 30th month in a row...“In November, the Services PMI® registered 56.5 percent, 2.1 percentage points higher than October’s reading of 54.4 percent... Based on comments from Business Survey Committee respondents, increased capacity and shorter lead times have resulted in a continued improvement in supply chain and logistics performance. A new fiscal period and the holiday season have contributed to stronger business activity and increased employment.” Report at...

https://www.ismworld.org/supply-management-news-and-reports/reports/ism-report-on-business/services/november/

FACTORY ORDERS (Reuters)
“New orders for U.S.-manufactured goods increased more than expected in October amid strong gains in demand for machinery and a range of other goods, which could allay concerns of a sharp slowdown in manufacturing. The Commerce Department said on Monday that factory orders jumped 1.0% after rising 0.3% in September.” Story at... 
https://www.reuters.com/markets/us/us-factory-orders-beat-expectations-october-2022-12-05/
 
MARKET REPORT / ANALYSIS
-Monday the S&P 500 dropped about 1.8% to 3999.
-VIX rose about 9% to 20.75.
-The yield on the 10-year Treasury rose to 3.585%.
 
PULLBACK DATA:
-Drop from Top: 16.6% as of today. 25.4% max (on a closing basis).
-Trading Days since Top: 232-days.
The S&P 500 is 1.1% BELOW its 200-dMA & 4.7% above its 50-dMA. (The last rally failed at the 200-dMA. The Index closed above its 200-dMA on 3 consecutive days and that’s a very good sign. Now it’s fallen below it, so it is a concern.)
*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:
XLI – Industrial ETF (XLI still looks good to me. Nearly 10% of XLI is in Boeing and Caterpillar and they are both strong performers in the DOW momentum analysis.) 
QLD – 2x Nas 100
DDM – 2x Dow 30. I may sell DDM and replace it with SSO (2x S&P 500), but for now, the DOW 30 is still doing better than the S&P 500.
XLK – Technology ETF
 
CVX – (I may hold this as a long-term position. I already owned a small position in CVX.)
 
TODAY’S COMMENT:
3900 remains a key level for the S&P 500 since it represents the lower trend-line of the current up-trend. As long as that holds, days like today aren’t cause for panic.
 
Friday, we noted that Breadth indicators had improved. Specifically:
-The 10-dMA percentage of issues advancing on the NYSE (Breadth) is above 50%.
-The 50-dMA percentage of issues advancing on the NYSE (Breadth) is above 50%.
-The 100-dMA percentage of issues advancing on the NYSE (Breadth) is above 50%
This shows that the rally off the lows has been broadening. The 50-day and the 100-day averages finally tracked above 50% last week, and overall, Friday indicators remain at extreme bullish levels.
 
I hear CNBC pundits saying that this rally is just like the rally that ended in August - close, but not quite.  RSI at the August top was a very overbought 86.  At the recent high, RSI was 75, elevated, but not yet overbought.
 
Today was a 90% down-volume day, since only 7% of volume was up-volume, but the S&P 500 didn’t close in the bottom of the range so it didn’t meet all Lowry Research criteria. Even if it had, one day is not a major bear sign. From Lowry Research:
“A single, isolated 90% Downside Day does not, by itself, have any long-term trend implications, since they often occur at the end of short-term corrections. But, because they show that investors are in a mood to panic, even an isolated 90% Downside Day should be viewed as an important warning that more could follow.” - Identifying Bear Market Bottoms - Lowry Research
 
All in all, we need to pay attention now; a trip back to retest the prior lows is possible, even though it is not my most likely scenario. Still, I didn’t like to see the Index fall below its 200-dMA as it did today.
 
LONG-TERM INDICATOR: The Long Term NTSM indicator remained BUY: SENTIMENT is neutral; VOLUME, VIX, & PRICE are bullish.  (The important Buy signal from this indicator ensemble was 21 October (7 days after the low); my first buy indication was on 27 September (2% above the low) based on analysis of retests of the June low.) I had a typo here – 27 Sept was the successful retest.
 
Bottom line: I remain a Bull. I think the bottom was 3577 on 12 October. There is always the possibility that the markets could retest those lows, but it seems unlikely that a retest will occur in 2022.
 
I’m now invested with about 75% of the portfolio invested in stocks. (As a retiree, 50% invested in stocks is my “normal” portfolio.) 75% stocks is uber-bullish and that’s as far as I’ll go.
 
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.
*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:

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

MONDAY MARKET INTERNALS (NYSE DATA)

My basket of Market Internals slipped 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 75% 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.