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“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
THE FED AND THE FED (RIA)
“There are plenty of reasons to be very concerned about the market over the next few months. We will use rallies to reduce equity exposure and hedge risks accordingly. A ‘short squeeze’ is coming, but we aren’t out of the woods yet...That remains our positioning currently, as there are two primary issues plaguing the “bull case”...the most significant challenges to the bull case remain the Fed not cutting interest rates and the Fed not engaging in “Quantitative Easing.”...It seems to us that the bull case may be too far ahead of reality. If that is true, being a little more cautious and selling rallies may hedge the risk one final leg lower in 2023.” Commentary at...
https://realinvestmentadvice.com/the-bull-case-has-a-two-problems/
My cmt: It’s possible that a retest of the October lows is coming.  We’ll just have to pay attention.
 
MARKET REPORT / ANALYSIS
-Monday the S&P 500 rose about 1.4% to 3991.
-VIX rose about 10% to 25.01.
-The yield on the 10-year Treasury rose to 3.615%.
 
PULLBACK DATA:
-Drop from Top: 16.8% as of today. 25.4% max (on a closing basis).
-Trading Days since Top: 237-days.
The S&P 500 is 1.1% BELOW its 200-dMA & 3.7% above 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:
I am doing less trading now. You may do better watching the momentum charts rather than my moves.
 
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.
XLK – Technology ETF
 
CVX – (I may hold this as a long-term position. I already owned a small position in CVX.)
 
TODAY’S COMMENT:
VIX jumped 10% higher today while the S&P 500 gained, too. Normally, VIX moves are opposite to the index, but it’s not set in stone. VIX actually indicates more volatility in either direction. In this case, it could mean that investors are buying puts to protect against a bad CPI number or bad Fed comments.
 
CPI is due out tomorrow morning at 8:30. It will move the markets. We also have a FED meeting Tuesday and Wednesday with the announcement on Wednesday.  Mid-week will be exciting! The Bollinger Squeeze last week predicted a big move in the markets – we may get that Tuesday or Wednesday, or both.
 
Today, the daily sum of 20 Indicators improved from +9 to +13 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations increased from +121 to 125. (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 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.)
 
Bottom line: I remain a Bull, though perhaps a bit more cautious. Let’s see what happens this week. I’ll take profits in the leveraged positions if there is weakness.
 
As previously noted, 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 improved to HOLD. That’s a warning; I’ll look at other signs before I do any selling.
(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.