NAVIGATE THE STOCK MARKET FOCUSES ON:
(1) Daily momentum analysis of the DOW 30 stocks and 15 ETFs across various market sectors.
(2) Stock Market commentary and analysis.
(3) Buy/Sell signals for major market turns.
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Monday, December 12, 2022
Best DOW Stocks ... Best ETFs … Stock Market Analysis ...
“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:
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.
