Navigate the Stock Market: March 2023

Friday, March 31, 2023

PCE Prices ... Personal Spending / Income... Chicago PMI ... Momentum Trading DOW Stocks & ETFs … Stock Market Analysis ...

“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.

“While all parties have a responsibility to negotiate in good faith, recent actions make clear to me that the Biden administration is determined to pursue an ideological agenda rather than confront the clear and present danger that debts and deficits pose to our nation. Our national debt stands at nearly $31.5 trillion, or close to $95,000 for every man, woman and child, and represents 120% of our gross domestic product... When President Biden and I spoke before Congress passed the Inflation Reduction Act last summer, we agreed that the bill was designed to pay down our national debt and shore up America’s energy security...Yet instead of implementing the law as intended, unelected ideologues, bureaucrats and appointees seem determined to violate and subvert the law to advance a partisan agenda that ignores both energy and fiscal security. Specifically, they are ignoring the law’s intent to support and expand fossil energy and are redefining “domestic energy” to increase clean-energy spending to potentially deficit-breaking levels.” – Senator Joe Manchin, Democrat from West Virginia. WSJ Op Ed at...
https://www.wsj.com/articles/biden-inflation-reduction-act-betrayal-joe-manchin-debt-ceiling-budget-fossil-fuels-green-energy-dc37738e?mod=hp_opin_pos_5

PCE PRICES (YahooFinance)
“The personal consumption expenditures (PCE) price index increased 0.3% last month after accelerating 0.6% in January...The core PCE price index rose 4.6% year-on-year after gaining 4.7% in January.
https://finance.yahoo.com/news/instant-view-us-feb-pce-131358404.html
Numbers indicate falling inflation, albeit slowly.

PERSONAL SPENDING / INCOME (CNBC)
“Consumers spent less in December even as an inflation measure considered key by the Federal Reserve showed the pace of price increases easing, the Commerce Department reported Friday...consumer spending was even less than already modest estimates, indicating that the economy slowed at the end of 2022 and contributing to expectations for a 2023 recession. Spending adjusted for inflation declined 0.2% on the month, worse than the 0.1% drop that Wall Street had been anticipating. Personal income increased 0.2% for the month, as expected.” Story at...
https://www.cnbc.com/2023/01/27/pce-inflation-december-2022-.html

CHICAGO PMI (Morningstar)
“The Chicago Business Barometer, also known as the Chicago PMI, inched up 0.2 index points to 43.8 in March. It was the first increase since December. The increase was unexpected. Economists polled by the Wall Street Journal forecast a 43 reading.” Story at...
https://www.morningstar.com/news/marketwatch/20230331417/chicago-business-activity-index-remains-in-contractionary-territory-for-seventh-straight-month-in-march
A number below 50 indicates contraction.

MARKET REPORT / ANALYSIS
-Friday the S&P 500 rose about 1.4% to 4109.
-VIX slipped about 1% to 18.82.
-The yield on the 10-year Treasury slipped to 3.471%.

PULLBACK DATA:
-Drop from Top: 14.3% as of today. 25.4% max (on a closing basis).
-Trading Days since Top: 312-days.
The S&P 500 is 4.4% ABOVE its 200-dMA and 2.2% 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 not trading as much as in the past. You may wish to use the momentum charts and/or the Monday 40-day gain charts for trading the Dow stocks and ETFs.
QLD – 2xNasdaq 100
SSO – 2x S&P 500
XLK – Technology ETF.
XLE – Energy Sector ETF. It hasn’t been doing much recently, but Russia is cutting production and that should help the sector. We have a good dividend in the meantime.
BA – (Boeing) I am late on this one, but we’ll see. They have more work than they can handle and are hiring. They should do well going forward. Boeing reports earnings 4/26/2023.
XLY - Consumer Discretionary ETF.
KRE – Regional Banking ETF. This is a small position for me. I have no cash left.

SHY – Short term bonds. 30-day yield is 4.6%. (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:
There was a Zweig Breadth Thrust today, Friday. This signals a rapid rise in breadth over a short period of time. It is a rare, and very bullish indicator. Like all indicators, it is not always right. Now though, bullish looks like the place to be.

Here’s this week’s Friday review of Indicators:
The Friday rundown of indicators jumped to the Bullish side (now 6-bear and 19-bull). (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
-There was a Follow-thru Day 3/31 that cancels prior Distribution Days.
-The smoothed advancing volume on the NYSE is rising.
-The 10-dMA percentage of issues advancing on the NYSE (Breadth) is above 50%.
-The 50-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%.
-There was a Zweig Breadth Thrust 31 March. That’s a rare, very-bullish sign.
-Slope of the 200-dMA is rising.
-The 52-week, New-high/new-low ratio improved by 3.5 standard deviations 27 March.
-Smoothed Buying Pressure minus Selling Pressure is rising.
-MACD of S&P 500 price made a bullish crossover 21 March.
-My Money Trend indicator is rising.
-Short-term new-high/new-low data.
-McClellan Oscillator.
-The long-term, 50-dEMA, Fosback Hi-Low Logic Index is bullish.
-The graph of the 100-day Count (the 100-day sum of up-days) is rising.
-The 5-10-20 Timer System is BUY; the 5-dEMA and 10-dEMA are both above the 20-dEMA.
-The 5-day EMA is above the 10-day EMA so short-term momentum is bullish.
-The Smart Money (late-day action) is bullish.
-73% of the 15-ETFs that I track have been up over the last 10-days – bullish.

NEUTRAL
-There have been 4 Statistically-Significant days (big moves in price-volume) in the last 15-days.
-Sentiment.
-Issues advancing on the NYSE (Breadth) compared to the S&P 500.
-9 March there was a Bearish Outside Reversal Day – expired.
-There have been 8 up-days over the last 10 sessions – leaning bearish, but neutral.
-There have been 12 up-days over the last 20 sessions - neutral.
-RSI
-There was a 90% down-volume day 9 March. Another one will push this into the Bear category.
-On average, the size of up-moves has been smaller than the size of down-moves over the last month, but not enough to send a signal.
-The 50-dMA percentage of issues advancing on the NYSE (Breadth) has not been below 50%, for 3 days in a row – neutral.
-The Calm-before-the-Storm/Panic Indicator flashed a panic-buying signal 10 November - expired.
-The short-term, 10-dayEMA, Fosback Hi-Low Logic Index is neutral.
-VIX indicator.
-The S&P 500 is 4.4% above its 200-dMA. (Bear indicator is 12% above the 200-day.)
-There was a Hindenburg Omen signal 8 April 2022 – 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
-S&P 500 is outperforming Utilities (XLU-ETF), but the spread is small so let’s call it neutral.

BEAR SIGNS
-Overbought/Oversold Index (Advance/Decline Ratio). – overbought.
-MACD of the percentage of issues advancing on the NYSE (breadth) made a bearish crossover 9 March.
-Long-term new-high/new-low data.
-Slope of the 40-dMA of New-highs is falling.
-XLI-ETF (Cyclical Industrials) is underperforming the S&P 500.
-Bollinger Bands are overbought.

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 6 bear-signs and 19-Bull. Last week, there were 13 bear-sign and 8 bull-signs.

Today, the daily spread of 20 Indicators (Bulls minus Bears) improved from +5 to +7 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations improved from +6 to +21. (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 was BUY: VOLUME is positive; SENTIMENT, VIX & PRICE are neutral. The Breadth Thrust today pushes this indicator to BUY.

(The important BUY in this indicator was on 21 October, 7-days after the bottom. For my NTSM overall signal, I suggested that a short-term buying opportunity occurred on 27 September (based on improved market internals on the retest), although without market follow-thru, I was unwilling to call a buy; however, I did close shorts and increased stock holdings. I issued a Buy-Signal on 4 October, 6-days before the final bottom, based on stronger market action that confirmed the market internals signal. The NTSM sell-signal was issued 20 December, 8 sessions before the high of this recent bear market, based on the bearish “Friday Rundown” of indicators.)

Bottom line: I am a Bull. We’ve seen some very bullish signs recently, confirmed by the Friday Rundown of Indicators.

ETF - 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 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 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.

Thursday, March 30, 2023

Jobless Claims ... GDP ... Momentum Trading DOW Stocks & ETFs … Stock Market Analysis ...

“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.

“Gross Domestic Product (GDP). GDP is simply the total amount of spending in an economy. GDP, as currently measured, does not distinguish between “good” spending and “bad” spending. GDP does not distinguish between consumption spending and investment spending. GDP also does not distinguish whether spending is generated by existing wealth, by going into debt temporarily, or by going into debt permanently. In this world, every dollar spent on education or new means of production, is counted the same as every dollar spent on epic bachelor parties and video games.” – Michael Lebowitz, Real Investment Advice

JOBLESS CLAIMS (CNBC)
“Initial filings for unemployment insurance ticked higher last week but remained generally low in a tight labor market.
Jobless claims for the week ended March 25 totaled 198,000, up 7,000 from the previous period and a bit higher than the 195,000 estimate...” Story at...
https://www.cnbc.com/2023/03/30/jobless-claims-edge-up-to-198000-higher-than-expected-.html

GDP (CNN)
“The US economy grew at a slower pace in the fourth quarter than initially estimated, as consumer spending continued to trail off. Inflation-adjusted gross domestic product — the broadest measure of economic activity — increased 2.6% for the final three months of 2022, according to the Commerce Department’s third and final reading for the quarter.” Story at...
https://www.cnn.com/2023/03/30/economy/us-gdp-4q-final/index.html

MARKET REPORT / ANALYSIS
-Thursday the S&P 500 rose about 0.6% to 4051.
-VIX slipped about 0.5% to 19.02.
-The yield on the 10-year Treasury slipped to 3.554%.

PULLBACK DATA:
-Drop from Top: 15.5% as of today. 25.4% max (on a closing basis).
-Trading Days since Top: 311-days.
The S&P 500 is 3% ABOVE its 200-dMA and 0.8% 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 not trading as much as in the past. You may wish to use the momentum charts and/or the Monday 40-day gain charts for trading the Dow stocks and ETFs.
QLD – 2xNasdaq 100
SSO – 2x S&P 500
XLK – Technology ETF.
XLE – Energy Sector ETF. It hasn’t been doing much recently, but Russia is cutting production and that should help the sector. We have a good dividend in the meantime.
BA – (Boeing) I am late on this one, but we’ll see. They have more work than they can handle and are hiring. They should do well going forward. Boeing reports earnings 4/26/2023.
XLY - Consumer Discretionary ETF.
KRE – Regional Banking ETF. This is a small position for me. I have no cash left.

SHY – Short term bonds. 30-day yield is 4.6%. (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:
Breadth has broadened out this week. More issues are participating in the advance. The 10-dMA of issues advancing on the NYSE, the 50-dMA and the 100-dMA are all above 50%. This indicates that most stocks have been advancing over various timeframes. Breadth hasn’t looked this bullish since 13 February, about 2 weeks after the recent weakness began in earnest.

Today, the daily spread of 20 Indicators (Bulls minus Bears) declined from +8 to +5 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations improved from -3 to +6. (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 was HOLD: VOLUME, SENTIMENT, VIX & PRICE are neutral.

(The important BUY in this indicator was on 21 October, 7-days after the bottom. For my NTSM overall signal, I suggested that a short-term buying opportunity occurred on 27 September (based on improved market internals on the retest), although without market follow-thru, I was unwilling to call a buy; however, I did close shorts and increased stock holdings. I issued a Buy-Signal on 4 October, 6-days before the final bottom, based on stronger market action that confirmed the market internals signal. The NTSM sell-signal was issued 20 December, 8 sessions before the high of this recent bear market, based on the bearish “Friday Rundown” of indicators.)

Bottom line: I am a Bull.

ETF - MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs (Ranked Daily)
ETF ranking follows:

My basket of Market Internals slipped to HOLD. (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.)

Wednesday, March 29, 2023

Crude Inventories ... Momentum Trading DOW Stocks & ETFs … Stock Market Analysis ...

“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.

THE FOOLISHNESS OF ENERGY WINDFALL PROFITS TAXES (MSN)
“The impact of windfall taxes on North Sea oil and gas exploration has turned out to be every bit as disastrous as critics predicted. More than 90 per cent of offshore firms are cutting investment, driven away by a raid on profits and the uncertain future caused by political meddling... The cuts mean the UK’s potential oil and gas resources have been downgraded, with 500 million barrels less likely to be produced – enough to support the nation for six months. This will just make Britain more dependent on imports. Indeed, as domestic production declines in the UK, overall reliance on oil and gas has actually increased.” Story at...
The foolishness of the energy windfall tax has now been proven (msn.com)

EIA CRUDE INVENTORIES (EIA)
“U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 7.5 million barrels from the previous week. At 473.7 million barrels, U.S. crude oil inventories are about 6% above the five year average for this time of year.” Report at...
https://ir.eia.gov/wpsr/wpsrsummary.pdf

SEASONALS REMAIN STRONG (Heritage Capital)
“...this week continues to be strong on a seasonal basis. Last week’s high in the various major stock market indices is the next point for the bulls and bears to embrace. Until then on the upside it is just noise, however I do believe the market will exceed those highs shortly. Beyond this week, we also have strong seasonal trends in April and the entire Q2. Remember, seasonals act as nice tailwinds or headwinds, but they are not triggers for a trade...The narratives haven’t been easy for the bulls. Historic yield curve inversion, bank failures, recession impending and saber rattling. Nonetheless, you already know that it’s not the news, but how markets react.” – Paul Schatz, President Heritage Capital. Commentary at...
https://investfortomorrow.com/blog/seasonals-remain-strong-banks-still-key/

MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 rose about 1.4% to 4028.
-VIX slipped about 4% to 19.12.
-The yield on the 10-year Treasury rose to 3.569%.

PULLBACK DATA:
-Drop from Top: 16% as of today. 25.4% max (on a closing basis).
-Trading Days since Top: 310-days.
The S&P 500 is 2.4% ABOVE its 200-dMA and 0.3% 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:
I am not trading as much as in the past. You may wish to use the momentum charts and/or the Monday 40-day gain charts for trading the Dow stocks and ETFs.
QLD – 2xNasdaq 100
SSO – 2x S&P 500
XLK – Technology ETF.
XLE – Energy Sector ETF. It hasn’t been doing much recently, but Russia is cutting production and that should help the sector. We have a good dividend in the meantime.
BA – (Boeing) I am late on this one, but we’ll see. They have more work than they can handle and are hiring. They should do well going forward. Boeing reports earnings 4/26/2023.
XLY - Consumer Discretionary ETF.
KRE – Regional Banking ETF. This is a small position for me. I have no cash left.

SHY – Short term bonds. 30-day yield is 4.6%. (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:
The S&P 500 finally broke above its 50-dMA an excellent sign for the Bulls.

My Money Trend indicator is based on an equation that relates advancing and declining volumes, advancing and declining stocks and changes in price (NYSE Composite) to produce the red indicator line (Advancing $ minus Declining $) in the above graph. There are a lot of percentages in the equations so the numbers on the right axis aren’t meaningful, except for the direction. Now it’s headed up, and that’s bullish.

I expect that the market weakness is now over and we should see clear sailing for a month or more. Sorry bears, after 3 months of weakness, I think the Bulls are back.

Today, the daily spread of 20 Indicators (Bulls minus Bears) improved from +6 to +8 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations improved from -14 to -3. (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 was BUY: VOLUME is bullish; SENTIMENT, VIX & PRICE are neutral. The big improvement in the new-high/new-low data we noted on Monday, along with the Volume Indicator, pushed the indicator to BUY.

(The important BUY in this indicator was on 21 October, 7-days after the bottom. For my NTSM overall signal, I suggested that a short-term buying opportunity occurred on 27 September (based on improved market internals on the retest), although without market follow-thru, I was unwilling to call a buy; however, I did close shorts and increased stock holdings. I issued a Buy-Signal on 4 October, 6-days before the final bottom, based on stronger market action that confirmed the market internals signal. The NTSM sell-signal was issued 20 December, 8 sessions before the high of this recent bear market, based on the bearish “Friday Rundown” of indicators.)

Bottom line: Back to Bullish! Go Bulls!

ETF - MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs (Ranked Daily)
ETF ranking follows:

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.)

Tuesday, March 28, 2023

Consumer Confidence ... Momentum Trading DOW Stocks & ETFs … Stock Market Analysis ...

“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.

HERE ARE TWO NPR NOTES
1)    From NPR: “Correction: An earlier tweet incorrectly stated there is limited scientific evidence of physical advantage. Existing research shows that higher levels of testosterone do impact athletic performance. But there’s limited research involving elite trans athletes in competition.” - NPR
   There is truth. And there is half-truth. The above statement to correct the prior misinformation is half-truth. If testosterone wasn’t an issue in elite athletes, why was Floyd Landis stripped of a Tour de France win due to excessive testosterone readings? That testosterone enhances performance is pretty well established in athletics.
2)    “NPR laid off 10 percent of its staff this week and announced that it would stop production of four podcasts...
Unfortunately, NPR has had to take painful but necessary steps to address a $30 million shortfall in revenues...”
https://www.nytimes.com/2023/03/25/us/npr-layoffs-podcasts.html
   Could these two NPR pieces be cause and effect? When stories are twisted due to politics...

CONSUMER CONFIDENCE (Conference Board)
“Driven by an uptick in expectations, consumer confidence improved somewhat in March, but remains below the average level seen in 2022 (104.5). The gain reflects an improved outlook for consumers under 55 years of age and for households earning $50,000 and over... While consumers feel a bit more confident about what’s ahead, they are slightly less optimistic about the current landscape...” Press release at...
https://www.conference-board.org/topics/consumer-confidence

“INSIDE THE STOCK MARKET” QUASHED THE SOFT LANDING (Felder Report)
“Over the past month or two, however, they [relative performance of things like transportation stocks, materials, retail and small caps] have taken another sharp dive, implying the “soft landing” scenario may not be as likely to materialize as stock market bulls may hope. In fact, their recent weakness strongly suggests you “better be careful and keep your eyes open” because we may be headed for a hard landing after all. And that’s a scenario that analysts and stock prices have not yet begun to discount.” – Stan Druckenmiller. Commentary at...
https://thefelderreport.com/2023/03/22/how-the-inside-of-the-stock-market-quashed-the-soft-landing-narrative/
   My cmt: I have my eyes open. In the last 2 days, we have begun to see some green shoots developing that may signal higher prices ahead for the markets. I don’t know about a soft landing; I won’t guess. Whatever landing we have may be pushed further out giving markets a chance to go higher in the interim.

MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 slipped about 0.2% to 3971.
-VIX bucked trend and slipped about 3% to 19.97.
-The yield on the 10-year Treasury rose to 3.567%.

PULLBACK DATA:
-Drop from Top: 17.2% as of today. 25.4% max (on a closing basis).
-Trading Days since Top: 309-days.
The S&P 500 is 1% ABOVE its 200-dMA 1.1% 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 not trading as much as in the past. You may wish to use the momentum charts and/or the Monday 40-day gain charts for trading the Dow stocks and ETFs.
QLD – 2xNasdaq 100
SSO – 2x S&P 500
XLK – Technology ETF.
XLE – Energy Sector ETF. It hasn’t been doing much recently, but Russia is cutting production and that should help the sector. We have a good dividend in the meantime.
BA – (Boeing) I am late on this one, but we’ll see. They have more work than they can handle and are hiring. They should do well going forward. Boeing reports earnings 4/26/2023.
XLY - Consumer Discretionary ETF.
KRE – Regional Banking ETF. This is a small position for me. I have no cash left.

SHY – Short term bonds. 30-day yield is 4.6%. (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.)

If it’s not tech, it’s probably not working.

TODAY’S COMMENT:
I misread one of my output sheets yesterday. The up-volume was only 77% not 82% as I reported. Still, the 10-dMA of up-volume popped up above 50% yesterday for the first time since 23 February. It remained 52% today so that is another bullish sign. Internals continue to improve so I think the weak period for the markets may be ending.

Today, the daily spread of 20 Indicators (Bulls minus Bears) declined from +8 to +6 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations improved from -24 to -14. (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 was HOLD: VOLUME, SENTIMENT, VIX & PRICE are neutral.

(The important BUY in this indicator was on 21 October, 7-days after the bottom. For my NTSM overall signal, I suggested that a short-term buying opportunity occurred on 27 September (based on improved market internals on the retest), although without market follow-thru, I was unwilling to call a buy; however, I did close shorts and increased stock holdings. I issued a Buy-Signal on 4 October, 6-days before the final bottom, based on stronger market action that confirmed the market internals signal. The NTSM sell-signal was issued 20 December, 8 sessions before the high of this recent bear market, based on the bearish Friday rundown of indicators.)

Bottom line: I am a nervous bull. The S&P 500 remained above its 200-dMA, but it has not been able to break above its 50-dMA for almost 3-weeks.

ETF - MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs (Ranked Daily)
ETF ranking follows:

Monday, March 27, 2023

Momentum Trading DOW Stocks & ETFs … Stock Market Analysis ...

“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.

“New York is poised to become the first state in the U.S. to pass a law banning natural-gas and other fossil-fuel hookups in new buildings, a step Democrats are pushing to help the state meet targets for greenhouse-gas reduction. The measure is on track to be added to the state’s coming budget, which is due to be completed this week.” Story at...
https://www.wsj.com/articles/new-york-poised-to-ban-gas-stoves-in-new-buildings-as-part-of-all-electric-mandate-ad8bd655
There is a weirdness to this idea. Currently, about 20% of electricity comes from renewables, but that includes hydropower. We won’t be building any new dams due to environmental concerns. Excluding hydropower, the US generates less than 15% from other renewable sources, wind and solar. Electricity is very expensive for heating, except in the South where heat pumps move heat from outside to inside (like a refrigerator in reverse). But electric heat, as in baseboards or forced air, is very inefficient. In addition, there are losses as the electricity is moved from the power plant to where it is used. The weirdness is that most of the electricity is now generated by natural gas and it will be for a long time, even if we double renewable electricity. Unless NY plans to replace all of its existing fossil fuel power plants with nuclear plants, this makes no sense.

STRESS AHEAD OF [THIS PAST] WEEKEND (Heritage Capital - Friday)
“A few weeks ago, I said that I didn’t think the low for this pullback was in place just yet. And with the S&P 500 in roughly the same area as a week ago, that probably still holds with the caveat that if we see a strong reversal in the banks, the markets should respond strongly to the upside. Stress remains in the banking system but less so in the markets. This feels like one of those times where markets need more time to repair wounds.” Commentary at...
https://investfortomorrow.com/blog/stress-ahead-of-the-weekend-yellen-her-flip-flops/

Tony Dwyer was on CNBC’s “Fast Money” today. He said that when the LEI has been at current levels, there has never been a soft landing. I decided to look back at the last LEI release from about 2 weeks ago. Here’s the chart. Apparently, I don’t understand his point. Perhaps he meant that when the LEI fell from its peak as much as now there has always been a recession?

LEADING ECONOMIC INDEX (Advisor Perspectives)
“The most recent financial turmoil in the US banking sector is not reflected in the LEI data but could have a negative impact on the outlook if it persists. Overall, The Conference Board forecasts rising interest rates paired with declining consumer spending will most likely push the US economy into recession in the near term.” - Conference Board Press release.

Chart from...
https://www.advisorperspectives.com/dshort/updates/2023/03/17/cb-lei-down-0-3-in-february-still-pointing-to-risk-of-recession

MARKET REPORT / ANALYSIS
-Monday the S&P 500 rose about 0.2% to 3978.
-VIX slipped about 5% to 20.63.
-The yield on the 10-year Treasury rose to 3.537%.

PULLBACK DATA:
-Drop from Top: 17.1% as of today. 25.4% max (on a closing basis).
-Trading Days since Top: 308-days.
The S&P 500 is 1.2% ABOVE its 200-dMA & 0.9% 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 not trading as much as in the past. You may wish to use the momentum charts and/or the Monday 40-day gain charts for trading the Dow stocks and ETFs.
QLD – 2xNasdaq 100
SSO – 2x S&P 500
XLK – Technology ETF.
XLE – Energy Sector ETF. It hasn’t been doing much recently, but Russia is cutting production and that should help the sector. We have a good dividend in the meantime.
BA – (Boeing) I am late on this one, but we’ll see. They have more work than they can handle and are hiring. They should do well going forward. Boeing reports earnings 4/26/2023.
XLY - Consumer Discretionary ETF.
KRE – Regional Banking ETF. This is a small position for me. I have no cash left.

SHY – Short term bonds. 30-day yield is 4.6%. (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.)

If it’s not tech, it’s probably not working.

TODAY’S COMMENT:
Markets looked good up until 3pm. After that, not so much. The S&P 500 dropped about ¾% in the last hour of trading. It still finished with a gain for the day so all was not lost.

There were some new bullish indicators which were almost enough to make me think that the S&P 500 sideways-correction might be ending. (The Index hasn’t gone very far in 3-weeks and it’s now about the same level it was 3 months ago.) I’d be more confident if the S&P 500 had made a strong finish. Those bullish signs were:
-The % of New-highs turned up today. That’s bullish after falling for nearly 2 months.
-My Money Trend indicator turned up. (That’s the first time in 3 weeks this indicator has been bullish.
-The McClellan oscillator turned up.
-There was a better than 3 std deviation improvement in new-high/new-low spread.
-82% of volume was up today; that will be a bullish sign if we have another 80+% bullish day Tuesday.
-My ensemble of market internals flipped to bullish.
-This is the highest daily spread (bull minus bear indicators) in over a month for the 20 indicators listed below.

Today, the daily spread of 20 Indicators (Bulls minus Bears) improved from -2 to +8 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations improved from -40 to -24. (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 was BUY: VOLUME IS BULLISH; SENTIMENT; VIX & PRICE are neutral. The big improvement in new-high/new-low numbers pushed the indicator to Buy.

(The important BUY in this indicator was on 21 October, 7-days after the bottom. For my NTSM overall signal, I suggested that a short-term buying opportunity occurred on 27 September (based on improved market internals on the retest), although without market follow-thru, I was unwilling to call a buy; however, I did close shorts and increased stock holdings. I issued a Buy-Signal on 4 October, 6-days before the final bottom, based on stronger market action that confirmed the market internals signal. The NTSM sell-signal was issued 20 December, 8 sessions before the high of this recent bear market, based on the bearish Friday rundown of indicators.)

Bottom line: I am a nervous bull. The S&P 500 remained above its 200-dMA, but it has not been able to break above its 50-dMA for almost 3-weeks.

ETF - MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs (Ranked Daily)
ETF ranking follows:

DOW STOCKS - TODAY’S MOMENTUM RANKING OF THE DOW 30 STOCKS (Ranked Daily)
DOW 30 momentum ranking follows:

MONDAY MARKET INTERNALS (NYSE DATA)

Friday, March 24, 2023

Durable Orders ... Markit Composite PMI ... Momentum Trading DOW Stocks & ETFs … Stock Market Analysis ...

“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.

“I don’t know any other way to say it...The former president is lying about the record of Governor DeSantis. He’s lying about how far he went to deal with shutdowns that were going across the country, but not going on in Florida. He’s lying about some of his accomplishments in the past.” - Neil Cavuto, Fox News host of “our World.”
My cmt: Really? Fox news has decided to tell the truth?

DURABLE ORDERS (SME)
“New orders for durable goods fell in February on transportation equipment, the Commerce Department reported today. Orders slid 1 percent to $268.4 billion last month, according to a monthly report. It was the third decline in the past four months and followed a revised fall of 5 percent in January. Excluding transportation, orders were almost unchanged.” Story at...
https://www.sme.org/technologies/articles/2023/march/durable-goods-orders-decline-on-transportation/

IHS MARKIT COMPOSITE PMI (S&P Global)
“US companies signalled a renewed expansion in business activity in March, according to the latest ‘flash’ PMI™ data from S&P Global. Output grew at a solid pace that was the fastest since May 2022 as demand conditions improved and new order growth returned. Manufacturers and service providers alike registered upturns in output, with service sector firms driving the increase.” Press release at...
https://www.pmi.spglobal.com/Public/Home/PressRelease/53e9f887b83e47d7bc6681c608d5aa3f

MARKET REPORT / ANALYSIS
-Friday the S&P 500 rose about 0.6% to 3971.
-VIX slipped about 2% to 22.15.
-The yield on the 10-year Treasury slipped to 3.376%.

PULLBACK DATA:
-Drop from Top: 17.2% as of today. 25.4% max (on a closing basis).
-Trading Days since Top: 307-days.
The S&P 500 is 1% ABOVE its 200-dMA & 1.1% 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 not trading as much as in the past. You may wish to use the momentum charts and/or the Monday 40-day gain charts for trading the Dow stocks and ETFs.
QLD – 2xNasdaq 100
SSO – 2x S&P 500
XLK – Technology ETF.
XLE – Energy Sector ETF. It hasn’t been doing much recently, but Russia is cutting production and that should help the sector. We have a good dividend in the meantime.
BA – (Boeing) I am late on this one, but we’ll see. They have more work than they can handle and are hiring. They should do well going forward. Boeing reports earning 4/26/2023.
XLY - Consumer Discretionary ETF.
*KRE – Regional Banking ETF. Added Monday. This is a small position for me. I have no cash left.

SHY – Short term bonds. 30-day yield is 4.6%. (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.)

If it’s not tech, it’s probably not working.

TODAY’S COMMENT:
Major indices were all higher today, but there were apparently concerns. Utilities and Consumer Staples outperformed by a lot, while Consumer Discretionary and Industrials underperformed. Those divergences don’t usually happen when the S&P 500 is up.

There was high, unchanged-volume today, so maybe the sign will be valid this time and markets will move higher next week. That’s the theory anyway. It’s not really clear now, though. The S&P 500 has been nearly flat for 3-weeks. Unchanged volume is supposed to indicate a change in direction. Now, the current direction is not clear so we don’t know which direction to expect the change.

Here’s this week’s Friday review of Indicators:
The Friday rundown of indicators had fewer bear signs this week (now 13-bear and 8-bull), but remained mostly bearish. (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 smoothed advancing volume on the NYSE is rising.
-The 100-dMA percentage of issues advancing on the NYSE (Breadth) is above 50%.
-My Money Trend indicator is rising.
-The graph of the 100-day Count (the 100-day sum of up-days) is rising.
-The Smart Money (late-day action) is bullish.
-The long-term, 50-dEMA, Fosback Hi-Low Logic Index is bullish.
-The 5-day EMA is above the 10-day EMA so short-term momentum is bullish.
-MACD of S&P 500 price made a bullish crossover 21 March.

NEUTRAL
-There have been 6 Statistically-Significant days (big moves in price-volume) in the last 15-days. This one can be hard to interpret, but since it occurred at a low point, it could be bullish. However, the back-and-forth movement is bearish. Lets just call this one neutral.
-Sentiment.
-Bollinger Bands.
-Issues advancing on the NYSE (Breadth) compared to the S&P 500.
-Overbought/Oversold Index (Advance/Decline Ratio).
-RSI
-There was a 90% down-volume day 9 March. Another one will push this into the Bear category.
-On average, the size of up-moves has been smaller than the size of down-moves over the last month, but not enough to send a signal.
-There have been 6 up-days over the last 10 sessions – neutral.
-There have been 11 up-days over the last 20 sessions - neutral.
-There was a Zweig Breadth Thrust 12 January. That’s a rare, very-bullish sign. - Expired
-The 50-dMA percentage of issues advancing on the NYSE (Breadth) has been below 50%, for 2 days in a row – still neutral.
-The Calm-before-the-Storm/Panic Indicator flashed a panic-buying signal 10 November - expired.
-The short-term, 10-dayEMA, Fosback Hi-Low Logic Index is neutral.
-The S&P 500 is 0.8% above its 200-dMA. (Bear indicator is 12% above the 200-day.)
-There was a Hindenburg Omen signal 8 April 2022 – 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.
-VIX indicator.
-55% of the 15-ETFs that I track have been up over the last 10-days – not quite bullish.
-S&P 500 is outperforming Utilities (XLU-ETF), but the spread is small so let’s call it neutral.

BEAR SIGNS
-There have been 6 Distribution Days in the last 5-weeks.
-The 10-dMA percentage of issues advancing on the NYSE (Breadth) is below 50%.
-The 50-dMA percentage of issues advancing on the NYSE (Breadth) is below 50%.
-MACD of the percentage of issues advancing on the NYSE (breadth) made a bearish crossover 9 March.
-Smoothed Buying Pressure minus Selling Pressure is falling.
-9 March there was a Bearish Outside Reversal Day.
-Slope of the 200-dMA is falling.
-Short-term new-high/new-low data.
-Long-term new-high/new-low data.
-Slope of the 40-dMA of New-highs is falling.
-McClellan Oscillator.
-The 5-10-20 Timer System is SELL; the 5-dEMA and 10-dEMA are both below the 20-dEMA.
-XLI-ETF (Cyclical Industrials) is underperforming the S&P 500.

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 13 bear-signs and 8-Bull. Last week, there were 19 bear-sign and 8 bull-signs.

Today, the daily spread of 20 Indicators (Bulls minus Bears) improved from -2 to -1 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations improved from -41 to -39. (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 was HOLD: VOLUME IS BULLISH; SENTIMENT; VIX & PRICE are neutral.

(The important BUY in this indicator was on 21 October, 7-days after the bottom. For my NTSM overall signal, I suggested that a short-term buying opportunity occurred on 27 September (based on improved market internals on the retest), although without market follow-thru, I was unwilling to call a buy; however, I did close shorts and increased stock holdings. I issued a Buy-Signal on 4 October, 6-days before the final bottom, based on stronger market action that confirmed the market internals signal. The NTSM sell-signal was issued 20 December, 8 sessions before the high of this recent bear market, based on the bearish Friday rundown of indicators.)

Bottom line: I am a nervous bull. The S&P 500 remained above its 200-dMA, but it has not been able to break above its 50-dMA for almost 3-weeks. I’d be concerned if the Index were to break below its 200-dMA. If there is any price weakness next week, I’ll be selling leveraged positions.

ETF - MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs (Ranked Daily)
ETF ranking follows:

My basket of Market Internals remained HOLD. (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.)