PPI ... Univ of Michigan Sentiment ... Trading DOW Stocks ... Trading ETFs … Stock Market Analysis ...

 
“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
PPI (CNBC)
“Wholesale prices rose more than expected in November as food prices surged, dampening hopes that inflation could be headed lower, the Labor Department reported Friday. The producer price index, a measure of what companies get for their products in the pipeline, increased 0.3% for the month and 7.4% from a year ago, which was the slowest 12-month pace since May 2021.” Story at... 
https://www.cnbc.com/2022/12/09/wholesale-prices-rose-0point3percent-in-november-more-than-expected-despite-hopes-that-inflation-is-cooling.html
 
UNIV OF MICHIGAN SENTIMENT (USNews)
“The preliminary December consumer sentiment index rose to 59.1 from 56.8 in November, beating estimates of it remaining unchanged to slightly down. Sentiment rose broadly with one-year business conditions rising 14% and longer-term expectations gaining 6%...the survey found that concerns over high prices – which remain high relative to just prior to this current inflationary episode – have eased modestly.” Story at...
https://www.usnews.com/news/economy/articles/2022-12-09/michigan-survey-finds-consumers-in-a-cheerier-mood-ahead-of-the-holidays
 
MARKET REPORT / ANALYSIS
-Friday the S&P 500 fell about 0.7% to 3934.
-VIX rose about 2% to 22.83. (That’s not much change if this is a major turning point.)
-The yield on the 10-year Treasury rose to 3.584%.
 
PULLBACK DATA:
-Drop from Top: 18% as of today. 25.4% max (on a closing basis).
-Trading Days since Top: 236-days.
The S&P 500 is 2.4% BELOW its 200-dMA & 3.4% 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:
Futures were up this morning until the Producer Price Index numbers came out slightly higher than expected.  That caused some market angst.
 
The S&P 500 closed just above its 100-dMA and its lower trend line.  I expect we’ll see a bounce higher next week based on the Bollinger Squeeze that occurred Thursday. I coul be wrong. A Bollinger Squeeze predicts a big move, but the direction is not clear.  I think it will be up based on indicators.
 
On Fridays, I summarize a number of indicators to get a weekly feel for trend. The Friday rundown of indicators is marginally bullish (10-bear and 12-bull) and we might as well call it neutral. These indicators tend to be both long-term and short-term, so they are different than the 20 that I report on daily.  
 
BULL SIGNS
-The 50-dMA percentage of issues advancing on the NYSE (Breadth) is above 50%.
-MACD of the percentage of issues advancing on the NYSE (breadth) made a bullish crossover 26 Oct.
-Smoothed Buying Pressure minus Selling Pressure is rising.
-Long-term new-high/new-low data.
-Slope of the 40-dMA of New-highs is rising, but just barely.
-There have only been 7 up-days over the last 20 sessions – bullish.
-VIX indicator.
- 90% up-volume days are bullish.
-The 5-10-20 Timer System is BUY; the 5-dEMA and 10-dEMA are both above the 20-dEMA.
-On average, the size of up-moves has been larger than the size of down-moves over the last month.
-The smoothed advancing volume on the NYSE is rising.
-13 & 21 Oct were Bullish Outside Reversal Days with no Bearish Outside Reversal days since then.
 
NEUTRAL
-The 50-dMA percentage of issues advancing on the NYSE (Breadth) has been above 50%, for 3 days in a row ending the “correction-now” signal.
-Bollinger Bands.
-RSI
-The short-term, 10-day, Fosback Hi-Low Logic Index.
-The longer-term, 50-dEMA, Fosback Hi-Low Logic Index is neutral.
-The graph of the 100-day Count (the 100-day sum of up-days) is neutral.
-XLI is outperforming the S&P 500, but the outperformance is dropping so let’s call tis neutral.
-Overbought/Oversold Index (Advance/Decline Ratio). 
-There was a Distribution Day 5 December, but 1 is not enough to send a signal.
-There have been 2 Statistically-Significant days (big moves in price-volume) in the last 15-days.
-Sentiment.
-There have been 2 up-days over the last 10 sessions – neutral.
-The Calm-before-the-Storm/Panic Indicator flashed a panic-buying signal 10 November - expired.
-The S&P 500 is 2.6% below its 200-dMA. (Bull indicator is 12% below the 200-day, although this is based on “normal” pullbacks.)
-There was an Inverse Zweig Breadth Collapse (negative Breadth Thrust) 21 June. That’s a rare, very-bearish sign, but it was a long time ago - expired.
-There was a Hindenburg Omen signal 8 April – expired.
-2.8% of all issues traded on the NYSE made new, 52-week highs when the S&P 500 made a new all-time-high, 3 January 2022. (There is no bullish signal for this indicator.) This indicated that the advance was too narrow and a correction was likely to be >10%. It proved correct, but is now Expired
-The 52-week, New-high/new-low ratio improved by 3.5 standard deviations. More simply, the spread between new-highs and new-lows improved by 716 on 14 October. That’s a solid bottom sign at a retest. – Expired.
-The Smart Money (late-day action) is neutral.
 
BEAR SIGNS
-The 10-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%
-Issues advancing on the NYSE (Breadth) compared to the S&P 500 turned bearish today.
-MACD of S&P 500 price made a bearish crossover 6 Dec.
-My Money Trend indicator is falling.
-Short-term new-high/new-low data.
-McClellan Oscillator.
-The 5-day EMA is above the 10-day EMA so short-term momentum is bearish.
-S&P 500 is underperforming the Utilities (XLU).
-39% of the 15-ETFs that I track have been up over the last 10-days.
 
On Friday, 21 February, 2 days after the top before the Coronavirus pullback, there were 10 bear-signs and 1 bull-sign. Now there are 10 bear-sign and 12-Bull. Last week, there were 1 bear-sign and 20 bull-signs.
 
Friday indicators dropped from extreme bullish levels to essentially neutral.
 
Today, the daily sum of 20 Indicators slipped from +10 to +9 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations declined from +127 to 121. (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 and VOLUME are neutral; 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 next week. I’ll take profits in the leveraged positions if there is more 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
 
FRIDAY MARKET INTERNALS (NYSE DATA)

My basket of Market Internals remained SELL. 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.