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“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
"If I was Darth Vader and I wanted to destroy the US economy, I would do aggressive spending in the middle of an already hot economy...This is the biggest bubble I've seen in my career." - Stanley Druckenmiller, billionaire investor. (27 July 2021, back when the CPI was around 3.0.)
 
SANTA DID CALL – 2023 SHOULD BE GOOD FOR ALL (Heritage Capital)
“I proclaim 2023 as the year of the bull. Stocks and bonds both end green and perhaps strongly so. There’s even a scenario for the S&P 500 to be up 20%+. Stay tuned…stocks have not started the year with any oomph or bang or conviction. The market looks like it wants to have a short-term resolution to the downside next week [week of 9 Jan] before Q4 earnings season begins. That could be an opportune time to buy.” – Paul Schatz. Commentary at...
https://investfortomorrow.com/blog/santa-did-call-2023-should-be-good-for-all/
 
MARKET REPORT / ANALYSIS
-Monday the S&P 500 dipped about 0.1% to 3892.
-VIX rose about 4% to 21.97
-The yield on the 10-year Treasury slipped to 3.533%.
 
PULLBACK DATA:
-Drop from Top: 18.9% as of today. 25.4% max (on a closing basis).
-Trading Days since Top: 255-days.
The S&P 500 is 2.5% BELOW its 200-dMA & 0.3% 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. (The S&P 500 is not far from its prior lows so I am holding this position, even though it is now a losing one.)
 
SSO – 2x S&P 500. (My indicators are improving.)
 
TODAY’S COMMENT:
As I’ve noted before, one of the simplest indicators for determining oversold / overbought conditions is simply counting the number of up-days in a given stretch of time. I report these numbers every Friday for the most recent 10- and 20-day periods. Friday there had been 9 up-days in the last 20 trading-days and 4 up-days in the last 10-days.  That’s a neutral sign based on my analysis. 
 
What I don’t usually report is the 100-day period. A number less than 47 up-days in 100 days is generally an oversold signal (again, my analysis), but as often stated, oversold conditions can remain for a long time.  The first reading in the current correction that was less than 47 occurred a few days before April Fool’s day, about 6-months before the bottom. 
 
It’s curious now though; as of today, there have only been 39 up-days in the last 100-days. That’s even lower than we saw in the great Recession and it matches the lowest during the 2000-2002 Dot.com crash.
 
The point of this analysis is to point out that investors are now more freaked out than they were during the Great Recession when the S&P 500 fell 57%; we have also now matched the low for this stat in the 2000-2002 Dot.com crash when the S&P 500 fell 49%.
 
In 2009 the lowest value occurred 3.5 months before the bottom and about 10% above the bottom. By that measure, the S&P 500 would drop about 10% from today’s close or about 3500 on the S&P 500. If that did happen to be a final low, that would be about 7% below the October lows...
 
...However, this is not a prediction! I think the bottom was 3577, or there about based on previous market action.
 
I am still watching the 50-dMA...
The S&P 500 climbed well above its 50-dMA Monday, but was (again) unable to stay there. We want the S&P 500 above its 50-dMA to feel bullish.
 
We noted that on Friday, up-volume was greater than 80% of the total volume and if Monday was another high, up-volume day (>80%) it would be a nice sign for the bulls. That didn’t happen.  Up-volume outpaced down-volume, Monday, a good sign, but up-volume was about 60% of the total, not enough to give us a strong bullish sign.
 
Today, the daily sum of 20 Indicators improved from +11 to +13 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations increased from +59 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 improved to BUY: PRICE & VIX are positive; VOLUME & SENTIMENT are neutral.  (The important BUY in this indicator was on 21 October, 7-days after the bottom. The NTSM buy-signal was 27 September, based on improved internals at the retest low.)
 
Bottom line: I’m a milld Bear at this point. I am defensively positioned in the markets, but not drastically so. There was a successful test and buy signal 27 September, so I need to be careful not to get too bearish. Perhaps cautious is a better word than bearish. I added a trading position in SSO on 1/9, based on improving market indicators.
 
I’m now have about 45% 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

MONDAY MARKET INTERNALS (NYSE DATA)

My basket of Market Internals remained BUY. (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 45% 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.