GDP ... Leading Economic Index ... Jobless Claims ... Best DOW Stocks ... Best ETFs … Stock Market Analysis ...

 
“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.

From...
https://jensorensen.com/2014/01/06/cartoon-scientists-global-warming-snowstorm/
This cartoon is supposed to be making fun of the deniers, but the sarcasm is subtle.
 
GDP (Fox Business)
“Gross domestic product (GDP) increased by 3.2% annualized in the third quarter of 2022, according to the third and final estimate released by the Bureau of Economic Analysis (BEA). That’s up from the previous estimate of 2.9% for the third quarter issued by the BEA in November.” Story at...
https://www.foxbusiness.com/personal-finance/gdp-increase-q3-economic-uncertainty
(Good news is bad news; investors are worrying about more Fed hikes as a result of the strong GDP.)
 
JOBLESS CLAIMS (Yahoo Finance)
“Initial Jobless Claims came in lower than expectations: 216K versus 220K expected, up +2000 claims from the slightly upwardly revised 214K the previous week.” Story at...
https://finance.yahoo.com/news/jobless-claims-calm-q3-gdp-153103900.html
 
LEADING ECONOMIC INDEX (Conference Board)
“The Conference Board Leading Economic Index® (LEI)for the U.S. decreased by 1.0 percent in November 2022 to 113.5 (2016=100), following a decline of 0.9 percent in October... “Despite the current resilience of the labor market—as revealed by the US CEI in November—and consumer confidence improving in December, the US LEI suggests the Federal Reserve’s monetary tightening cycle is curtailing aspects of economic activity, especially housing. As a result, we project a US recession is likely to start around the beginning of 2023 and last through mid-year.” Press release at...
https://www.conference-board.org/topics/us-leading-indicators/press/us-lei-dec-2022
 
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 fell about 1.5% to 3822.
-VIX rose about 9% to 21.97
-The yield on the 10-year Treasury rose to 3.682%.
 
PULLBACK DATA:
-Drop from Top: 20.3% as of today. 25.4% max (on a closing basis).
-Trading Days since Top: 245-days.
The S&P 500 is 4.9% BELOW its 200-dMA & 1.5% 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:
The S&P 500 gave took back Tuesday’s gain and closed less than 1pt from where it closed on Monday.  The S&P 500 failed at its 50-dMA Tuesday; nothing like computerized trading on Wall Street. How else can one explain a closing yesterday exactly on the 50-day? That failure was enough to scare traders.  The high GDP number was blamed and who knows – the pundits could be right. LEI fell and the Conference Board continues its recession call for 2023, so there was plenty to worry about today.
 
When I look at my analysis method during past corrections greater than 10%, a successful test was usually followed by a significant move higher.  That didn’t happen in 2010. A successful test occurred in May of 2010 with significant improvement to internals. However, the S&P 500 fell another 4% below the May low about 5-weeks later. We’re already 7-weeks past the October lows, so we may not follow that exact scenario now; but I’ll be watching. It is still reasonable to suspect that the October low was the bottom or very near the bottom.  It is also possible that new  lows are still ahead of us, as all of the CNBC Fast Money experts are predicting.
 
Today, the daily sum of 20 Indicators dropped from +9 to +3 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations declined from +76 to 69. (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 becoming a real 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. 
 
I’m now have about 40% of the portfolio invested in stocks. (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:

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
 
THURSDAY MARKET INTERNALS (NYSE DATA)

My basket of Market Internals remained NEUTRAL. (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.