CPI ... 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.
 
“Wars reveal much about societies, and this one is no exception. The invasion of Ukraine is not about legitimate grievance, or even the aspirations of a dictator, but about a more profound problem of Russia’s imperial self-conception. And that is why assuring victory to Ukraine and a defeat of those ambitions is so important.” – Elliot A. Cohen, professor at Johns Hopkins School of Advanced International Studies and chair in strategy at the Center for Strategic and International Studies. 
 
In its early years, my NTSM Blog had a large Russian readership, but that didn’t last. When Putin was first elected, UN election watchers identified massive fraud due to skewed results in some areas.  Russia was forced to hold another election, but Putin leaned how to cheat better and he was elected. When I criticized that phony election my Russian readers vanished.
 

CPI (CNBC)
“The consumer price index, which measures the cost of a broad basket of goods and services, fell 0.1% for the month, in line with the Dow Jones estimate. That equated to the largest month-over-month decrease since April 2020...[during Covid lockdown]...” Story at...
https://www.cnbc.com/2023/01/12/consumer-prices-fell-0point1percent-in-december-in-line-with-economists-expectations.html
 
JOBLESS CLAIMS (WSJ)
“Initial jobless claims, a proxy for layoffs, fell by 1,000 to a seasonally adjusted 205,000 last week, the Labor Department said Thursday. Claims had trended higher since touching near record lows early in 2022, but continue to hover near pre-pandemic levels...“Inflation is quickly moderating. Obviously, it’s still painfully high, but it’s quickly moving in the right direction,” said Mark Zandi, chief economist at Moody’s Analytics. ” Story at...
https://www.wsj.com/articles/u-s-jobless-claims-edge-down-in-first-week-of-year-11673530895
 
2023 FEARLESS FORECAST – YEAR OF THE BULL – EXCERPT (Heritage Capital)
“The stock market begins 2023 with strong headwinds of sharply higher interest rates, stubbornly high inflation, weakening economy and a dogmatic Federal Reserve. Those do not sound like ingredients for a bull market or positive year. But that’s exactly what I see ahead. 2023 will be green for the stock market. How the markets get from January 1 to December 31 is the interesting question...On the index front the venerable Dow Jones Industrial Average will be the laggard in 2023. Looking at the sectors, the semiconductors make a big comeback and energy lags...I haven’t been this excited for fixed income since March 2009. All reasonable scenarios lead to higher bond prices and lower yields. By “bonds”, I am referring to treasury and investment grade corporates.” – Paul Schatz, President Heritage Capital. Full forecast at... 
https://investfortomorrow.com/blog/2023-fearless-forecast-year-of-the-bull/
 
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 rose about 0.3% to 3983.
-VIX fell about 11% to 18.83.
-The yield on the 10-year Treasury dipped to 3.446%.
 
PULLBACK DATA:
-Drop from Top: 17% as of today. 25.4% max (on a closing basis).
-Trading Days since Top: 258-days.
The S&P 500 is at its 200-dMA & 1.8% 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.
 
MY TRADING POSITIONS:
I am doing less trading now. You may do better watching the momentum charts rather than my moves.
XLK – Technology ETF.
SSO – 2x S&P 500. (My indicators are improving.)
XLE – Energy Sector ETF. Low PE; good Dividend; decent momentum.
BA – I am late on this one, but we’ll see.
 
Consumer Discretionary (XLY) has been outperforming recently, another bullish sign. That would be a good choice now if the bottom really has been made.
ITA remains near the top in my momentum ETF analysis. I saw an article mentioning that the US needs to decide whether to arm Ukraine or replenish US stocks. I suspect we'll do both.  
 
TODAY’S COMMENT:
All of the CNBC regulars (except for Jim Lebenthal) and most guest pundits are saying the same thing: Markets will fall in the first half of the year as interest rates cause a slowdown and then rally in the latter half of the year.  I’d be very careful about group think. They could be right, but right now, the market does not agree with them. In any event, when everyone on Wall Street thinks one thing will happen, the actual outcome is often the opposite. Mr. Market is hard to predict; that’s why I try to follow him. Again, now and always, “Trade what you see; not what you think.”
 
S&P 500 climbed above its 200-dMA, but closed a whisker below it. However, there was a very bullish sign today - Thursday there was a Breadth Thrust.
 
“The Breadth Thrust Indicator is a technical indicator which determines market momentum, signaling the start of a potential new bull market. The idea is based on the principle that the sudden change of money in the investment markets elevates stocks and signals increased liquidity.”
https://www.investopedia.com/terms/b/breadth-thrust-indicator.asp#:~:text=The%20Breadth%20Thrust%20Indicator%20is%20a%20technical%20indicator%20which%20determines,stocks%20and%20signals%20increased%20liquidity.
 
Essentially, a Breadth Thrust is a rapid upward change in Breadth. In my case, it means that the % of advancing issues have increased dramatically over the last 10-days. Like all indicators, it isn’t foolproff. There was a Breadth Thrust in June and that one obviously didn’t signal a new bull market. There was one in January of 2019 and that one did occur 8-days after the low of a 20% correction that ended in December of 2018.
 
Today, the daily sum of 20 Indicators remained +13 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations increased from +89 to 103. (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: VOLUME & VIX are positive; PRICE & 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.)
 
The Advance / Decline Ratio remained overbought . This indicator signals frequently; a Breadth Thrust is rare and more significant.
 
Bottom line: I’m a BULL at this point. I am over-invested in the markets, back to where I was before the recent weakness got me worried that the S&P 500 might make a lower low, even though my analysis suggested that the bottom was roughly 3600 for the S&P 500.
 
I’m now have about 75% 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 so I am just resetting my stock allocation based on my analysis that showed the correction bottom probably occurred around 27 September. As the rally ages, I’ll cut back toward a 50% stock allocation more suitable for my status as a retiree.
 
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 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 75% stocks, including stock mutual funds and ETFs. I’m usually about 50% invested in stocks.
 
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.