Retail Sales ... Jobless Claims ... Philadelphia Fed Index ... Industrial Production ... Best DOW Stocks ... Best ETFs … Stock Market Analysis ...

 
“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
“’I have no doubt there will be more people bolting from stocks tomorrow morning [Thursday], believing they’ve been given a tremendous opportunity to get out well ahead of when things accelerate to the downside. I think they’re being too frantic...If Powell felt that things weren’t going his way...what he would’ve done is hit us with another 75 basis point rate hike, not a 50. He didn’t do that because he knows we’re making progress.” – Jim Cramer, CNBC Contributor
 
RETAIL SALES (CNN)
“US retail sales fell sharply at the start of the holiday shopping season, dropping by 0.6% during the month of November, according to data released Thursday by the Commerce Department. Pullbacks in auto sales helped drive the decline — the largest monthly decrease seen all year — but even excluding autos, monthly sales declined by 0.2%, despite cooling inflation.”
https://www.cnn.com/2022/12/15/economy/us-retail-sales-november/index.html
This was a larger than expected drop in sales.
 
JOBLESS CLAIMS (CNN)
“The number of first-time claims for unemployment benefits fell to 211,000 for the week ended December 10, according to data released Thursday by the Department of Labor. That’s a drop of 20,000 from the previous week’s total, which was upwardly revised to 231,000; and the lowest level since September.” Story at...
https://www.cnn.com/2022/12/15/economy/jobless-claims-december/index.html
Expectations were for about 20,000 more claims. Good news is bad news as the FED’s rate hikes are not yet affecting the job market.  Jobs are a lagging indicator.
 
PHILADLPHIA FED INDEX (RTT News)
“Philadelphia-area manufacturing activity contracted at a slower rate in the month of December, according to a report released by the Federal Reserve Bank of Philadelphia on Thursday. The Philly Fed said its diffusion index for current activity rose to a negative 13.8 in December from a negative 19.4 in November, although a negative reading still indicates a contraction.” Story at...
https://www.rttnews.com/3332382/philly-fed-index-remains-negative-for-fourth-straight-month-in-december.aspx
 
EMPIRE STATE MANUFACTURING Advisor Perspectives)
“Business activity declined in New York State, according to firms responding to the December 2022 Empire State Manufacturing Survey. The headline general business conditions index fell sixteen points to -11.2.”  Commentary at...
https://www.advisorperspectives.com/dshort/commentaries/2022/12/15/empire-state-mfg-survey-activity-declined-in-december
 
INDUSTRIAL PRODUCTION (Seeking Alpha)
“Total industrial production decreased by 0.2 percent in November, after declining by 0.1 percent in October. Total industrial production is down in five of the last seven months. Over the past year, total industrial output is up 2.5 percent.” Story at...
https://seekingalpha.com/article/4564732-manufacturing-sector-declines-in-november
 
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 fell about 2.5% to 3896.
-VIX rose about 8% to 22.83, but I would have expected it to be higher gven the big drop in the S&P 500.
-The yield on the 10-year Treasury dropped to 3.448%.
 
PULLBACK DATA:
-Drop from Top: 18.8% as of today. 25.4% max (on a closing basis).
-Trading Days since Top: 240-days.
The S&P 500 is 3.3% BELOW its 200-dMA & 0.9% 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:
Wednesday, unchanged volume was very high. As I’ve often said, many believe that this indicator suggests investor confusion at market turning points. In addition, the Bollinger Squeeze last week predicted a big move in the markets – today we got it, but it was down. I thought we’d see the move up, but the news trumped technicals. The FED, Retail Sales and China economic news were all disappointing.
 
The S&P 500 closed 0.9% above its 50-dMA – that’s a point of strong resistance so that’s a hopeful sign for the bulls. Depending on how one draws the charts for the S&P 500, the Index is either at its lower trend line or well below it, so the 50-day may be more important.
 
I never like to sell positions on huge down-days, because the markets usually retrace some of the down-move the next day; but I won’t wait much longer to sell my leveraged positions. If the S&P 500 closes below today’s close of 3895, it will be a definite sell signal fro me.
 
Today was a statistically significant down-day. That just means that the price-volume move exceeded my statistical parameters. Statistics show that a statistically-significant, down-day is followed by an up-day about 60% of the time.
 
Friday’s rundown of indicators should be interesting. Let’s see what tomorrow brings.
 
Today, the daily sum of 20 Indicators fell from +6 to +1 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations declined from +128 to 112. (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 slipped to HOLD: SENTIMENT is neutral; VIX & PRICE are bullish; VOLUME is negative. 
 
Bottom line: I’m a cautious Bull at this point. I’ll have to cut back stock holdings if there is additional 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
 
THURSDAY MARKET INTERNALS (NYSE DATA)

My basket of Market Internals remained SELL. It’s unusual to see that sort of reversal in one day.
(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.