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“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
Not much market moving news today...
 
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 dipped about 0.4% to 3829.
-VIX rose about 4% to 21.65
-The yield on the 10-year Treasury rose to 3.847%.
 
PULLBACK DATA:
-Drop from Top: 20.2% as of today. 25.4% max (on a closing basis).
-Trading Days since Top: 247-days.
The S&P 500 is 4.6% BELOW its 200-dMA & 1.6% 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.
 
MY TRADING POSITIONS:
I am doing less trading now. You may do better watching the momentum charts rather than my moves.
 
XLK – Technology ETF. (I may need to sell this position. We’ll see. Santa Clause rally has been underwhelming so far)
 
TODAY’S COMMENT:
Holiday trading is continuing today.  The volume was about 30% below the monthly average, so we can’t take too much from this week’s market action.
 
Last Friday, the Friday rundown of indicators was about 2 to 1 bearish (13-bear and 6-bull). I didn’t see anything dramatic in the indicators that would suggest a reversal is in the works today. Bollinger Bands are close to oversold. If RSI and Bollinger Bands are both oversold we might be able to be a little bullish in the short term. Market internals were generally negative, although volume was slightly higher for advancing stocks than declining. Energy was the market leader today – not much change there.
 
Today, the daily sum of 20 Indicators dropped from +5 to zero (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations declined from +65 to 52. (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 HOLD: SENTIMENT is neutral; VIX & PRICE are bullish; VOLUME is negative. 
 
Bottom line: I’m a Bear at this point. I am defensively positioned in the markets, but not drastically so.  I may cut stock holdings to 30% (the lowest I will go), but I’ll wait rather than selling into this downturn now. Maybe we’ll get some more bullish action before the new year.  Since the Index has broken below its 50-dMA, a retest of the October lows (about 5% below today’s close) seems likely.  
 
I’m now have about 40% of the portfolio invested in stocks. (As a retiree, 50% invested in stocks is my “normal” portfolio.) I was 75% invested in stocks in early December.
 
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
 
TUESDAY MARKET INTERNALS (NYSE DATA)

My basket of Market Internals slipped to SELL. (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 40% stocks, including stock mutual funds and ETFs. I’m usually about 50% invested in stocks. Last week’s Friday-run-down indicator ensemble was bad enough to convince me to take a more conservative view of the markets.
 
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.