“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
FED RAISES A QUARTER POINT (CNBC)
“The Federal Reserve on Wednesday raised its benchmark interest rate by a quarter percentage point and gave little indication it is nearing the end of this hiking cycle.” Story...
https://www.cnbc.com/2023/02/01/fed-rate-decision-february-2023-quarter-point-hike.html
My cmt: After some initial angst, the news was well received on Fed chair Powell’s press conference.
ADP EMPLOYMENT (ADP)
“In January, we saw the impact of weather-related disruptions on employment during our reference week. Hiring was stronger during other weeks of the month, in line with the strength we saw late last year.”
Press release at...
https://adpemploymentreport.com/
The above chart may be hard to read. Employment is to the right, vertical Y-axis; “Years” are along the x-axis. The important point is that employment continues to rise.
ISM MANUFACTURING (ISM)
“The January Manufacturing PMI® registered 47.4 percent, 1 percentage point lower than the seasonally adjusted 48.4 percent recorded in December. Regarding the overall economy, this figure indicates a second month of contraction after a 30-month period of expansion. The Manufacturing PMI® figure is the lowest since May 2020, when it registered a seasonally adjusted 43.5 percent.” Press release at...
https://www.ismworld.org/supply-management-news-and-reports/reports/ism-report-on-business/pmi/january/
JOLTS – JOB OPENINGS (CNN News)
“Despite the looming threat of recession and the cacophony of mass layoff announcements, US businesses still need workers — 11.01 million of them. The number of available jobs unexpectedly rose in December, climbing from a revised 10.44 million openings in November and exceeding economists’ expectations of 10.25 million, according to Bureau of Labor Statistics data released Wednesday. The 11 million openings for December is the highest since July.” Story at...
https://www.cnn.com/2023/02/01/economy/jolts-job-openings-layoffs-december/index.html
So much for all the layoffs. Most of the layoff talk seems overblown to me. Microsoft laid off 10,000 employees. That’s 4.5% of their total. It’s not good news, but it’s not a disaster either especially since they hired 50,000 employees during the pandemic.
EIA CRUDE INVENTORIES (EIA)
“U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 4.1 million barrels from the previous week. At 452.7 million barrels, U.S. crude oil inventories are about 4% above the five-year average for this time of year.” Press release at...
https://ir.eia.gov/wpsr/wpsrsummary.pdf
SOMETHING’S GOTTA GIVE (The Felder
Report)
“...if the Fed is going to cut rates later this year, against its most recent guidance which suggests rates will remain elevated for a prolonged period of time, they would likely only do so in reaction to overwhelming evidence that recession has begun and inflation pressures will continue to wane as a result. Of course, this may not be the positive catalyst stock market bulls might hope for; just the opposite.” Commentary at...
https://thefelderreport.com/2023/01/25/somethings-gotta-give/
My cmt: We’ll see. No need to panic now.
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 rose about 1% to 4119.
-VIX declined about 8% to 17.87.
-The yield on the 10-year Treasury dipped to 3.412%.
PULLBACK DATA:
-Drop from Top: 14.1% as of today. 25.4% max (on a closing basis).
-Trading Days since Top: 271-days.
The S&P 500 is 4.2% ABOVE its 200-dMA & 4.3% 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:
QLD – (2xNas 100) The XLK bottomed 12 October, about the same time as when the S&P 500 retested its low. QLD seems like a decent bet even though the CNBC crowd doesn’t like Tech.
XLK – Technology ETF.
SSO – 2x S&P 500.
XLE – Energy Sector ETF. Low PE; good Dividend; decent momentum, although momentum has been slipping recently.
BA – (Boeing) I am late on this one, but we’ll see.
XLY - Consumer Discretionary ETF. (I considered selling XLY. But it has been a good performer recently, so I’ll continue to watch it.)
SHY – Short term bonds. 30-day yield is 4.2%. (Trailing 1-year yield is 1.3%.) I’ll hold this, but if the market retests the lows, I’ll sell it and buy stocks.)
TODAY’S COMMENT:
I had a hard time finding bearish indicators today. There were a few that I noticed: The Advance/Decline Ratio (a measure of Breadth) is overbought; the late day-action Smart Money indicator is overbought.
There were a few others close to overbought, such as
Bollinger Bands, Buying-Pressure minus Selling-Pressure and RSI, but it’s not
surprising to see overbought indications given the big moves so far this year.
I’ll wait till Friday to do a complete count. The point is that right now, it’s full Bull
ahead.
If you’ve watched any Financial TV recently, you have
seen Mike Wilson of Morgan Stanley predicting a continuation of the Bear
Market. Here’s what he said on Bloomberg: “Earnings are disappointing
everywhere, OK? This is one of the worst streaks in earnings we’ve seen in
quite a while...The earnings are bad.” I don’t know Mike. Obviously, the markets don’t agree. Remember, FactSet said two weeks ago that the
earnings were in line with the 5-year average. Admittedly, that includes the pandemic
years so it may not be the best comparison, but still, I’d rather listen to
market participants than guess that earnings may fall. That’s what we hear all
the time on CNBC – ‘There’s an earnings recession coming.’ I’d rather not trade
what I think. I’ll trade what I
see. What I see (in the indicators) is
very positive now, so let’s be positive.
Today, the daily sum of 20 Indicators improved from +4 to
+13 (a positive number is bullish; negatives are bearish); the 10-day smoothed
sum that smooths the daily fluctuations improved from +42 to 48. (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 & VOLUME are positive. VIX & SENTIMENT are neutral.
(The important BUY in this indicator was on 21 October, 7-days after the bottom. My NTSM buy-signal was 27 September, based on improved internals at the retest low, about 2% before the bottom.)
Bottom line: I’m a BULL.
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
WEDNESDAY MARKET INTERNALS
(NYSE DATA)
My basket of Market Internals improved to 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.
“The Federal Reserve on Wednesday raised its benchmark interest rate by a quarter percentage point and gave little indication it is nearing the end of this hiking cycle.” Story...
https://www.cnbc.com/2023/02/01/fed-rate-decision-february-2023-quarter-point-hike.html
My cmt: After some initial angst, the news was well received on Fed chair Powell’s press conference.
“In January, we saw the impact of weather-related disruptions on employment during our reference week. Hiring was stronger during other weeks of the month, in line with the strength we saw late last year.”
Press release at...
https://adpemploymentreport.com/
The above chart may be hard to read. Employment is to the right, vertical Y-axis; “Years” are along the x-axis. The important point is that employment continues to rise.
“The January Manufacturing PMI® registered 47.4 percent, 1 percentage point lower than the seasonally adjusted 48.4 percent recorded in December. Regarding the overall economy, this figure indicates a second month of contraction after a 30-month period of expansion. The Manufacturing PMI® figure is the lowest since May 2020, when it registered a seasonally adjusted 43.5 percent.” Press release at...
https://www.ismworld.org/supply-management-news-and-reports/reports/ism-report-on-business/pmi/january/
“Despite the looming threat of recession and the cacophony of mass layoff announcements, US businesses still need workers — 11.01 million of them. The number of available jobs unexpectedly rose in December, climbing from a revised 10.44 million openings in November and exceeding economists’ expectations of 10.25 million, according to Bureau of Labor Statistics data released Wednesday. The 11 million openings for December is the highest since July.” Story at...
https://www.cnn.com/2023/02/01/economy/jolts-job-openings-layoffs-december/index.html
So much for all the layoffs. Most of the layoff talk seems overblown to me. Microsoft laid off 10,000 employees. That’s 4.5% of their total. It’s not good news, but it’s not a disaster either especially since they hired 50,000 employees during the pandemic.
“U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 4.1 million barrels from the previous week. At 452.7 million barrels, U.S. crude oil inventories are about 4% above the five-year average for this time of year.” Press release at...
https://ir.eia.gov/wpsr/wpsrsummary.pdf
“...if the Fed is going to cut rates later this year, against its most recent guidance which suggests rates will remain elevated for a prolonged period of time, they would likely only do so in reaction to overwhelming evidence that recession has begun and inflation pressures will continue to wane as a result. Of course, this may not be the positive catalyst stock market bulls might hope for; just the opposite.” Commentary at...
https://thefelderreport.com/2023/01/25/somethings-gotta-give/
My cmt: We’ll see. No need to panic now.
-Wednesday the S&P 500 rose about 1% to 4119.
-VIX declined about 8% to 17.87.
-The yield on the 10-year Treasury dipped to 3.412%.
-Drop from Top: 14.1% as of today. 25.4% max (on a closing basis).
-Trading Days since Top: 271-days.
The S&P 500 is 4.2% ABOVE its 200-dMA & 4.3% 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.
QLD – (2xNas 100) The XLK bottomed 12 October, about the same time as when the S&P 500 retested its low. QLD seems like a decent bet even though the CNBC crowd doesn’t like Tech.
XLK – Technology ETF.
SSO – 2x S&P 500.
XLE – Energy Sector ETF. Low PE; good Dividend; decent momentum, although momentum has been slipping recently.
BA – (Boeing) I am late on this one, but we’ll see.
XLY - Consumer Discretionary ETF. (I considered selling XLY. But it has been a good performer recently, so I’ll continue to watch it.)
SHY – Short term bonds. 30-day yield is 4.2%. (Trailing 1-year yield is 1.3%.) I’ll hold this, but if the market retests the lows, I’ll sell it and buy stocks.)
I had a hard time finding bearish indicators today. There were a few that I noticed: The Advance/Decline Ratio (a measure of Breadth) is overbought; the late day-action Smart Money indicator is overbought.
(The important BUY in this indicator was on 21 October, 7-days after the bottom. My NTSM buy-signal was 27 September, based on improved internals at the retest low, about 2% before the bottom.)
Bottom line: I’m a BULL.
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
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
