Jobless Claims ... Momentum Trading DOW Stocks & ETFs … Stock Market Analysis ...
“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
“If you look at the polls, a lot of people think that
that election was rigged and stolen. And I happen to be one of them...I'm an
election denier, and so are, substantially, I would say substantially more than
50% of this country. And I think it's a much higher number than that. You get a
lot of election deniers in this country, and they're not happy about what
happened.” - Former President Donald Trump.
My cmt: Suppose Fox News is required to issue a mea culpa and tell the truth as part
of the Dominion lawsuit decision? That would be interesting!
JOBLESS CLAIMS (YahooFinance)
“...labor market data showed weekly initial jobless
claims rose more than expected last week while stocks on Wall Street sold off
to sap risk appetite. New claims for unemployment benefits increased by 21,000
last week to a seasonally adjusted 211,000, the most in five months, although
the trend continues to indicate a tight labor market.” Story at...
https://finance.yahoo.com/news/treasuries-u-yields-drop-initial-214412871.html
THE STOCK MARKET RALLY IS STILL ON (MarketWatch via
msn.com, Wednesday)
“The rally in stocks isn't going to be derailed by a
hawkish Federal Reserve, as falling inflation still points to a 20% gain for
the market this year, according to Fundstrat's head of research Tom Lee. In a
note on Wednesday, Lee reiterated his bullish view on stocks despite Fed
Chairman Jerome Powell's hawkish testimony before Congress on Tuesday.” Story
at...
The
rally in stocks won't be swayed by a hawkish Powell, as falling inflation still
points to a 20% gain for the market this year, Fundstrat says (msn.com)
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 fell about 1.9% to 3918.
-VIX jumped about 18% to 22.61.
-The yield on the 10-year Treasury dipped to 3.911%.
PULLBACK DATA:
-Drop from Top: 18.3% as of today. 25.4% max (on a
closing basis).
-Trading Days since Top: 296-days.
The S&P 500 is 0.6% BELOW its 200-dMA & 2%
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.
XLY - Consumer Discretionary ETF.
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:
I was out all day and didn’t manage to follow my own
advice - I said yesterday that I would sell leveraged positions (SSO & QLD)
if the S&P 500 closed significantly lower. Let’s look at today’s issues
before I decide on action for tomorrow.
I mentioned some bearish signs in the last couple of
days. Today, there were even more
worrisome signs. Thursday was a 90% down-volume day with more than 90% of all
volume to the downside. Here’s what Lowry Research had to say about 90%
down-days; “A single, isolated 90% Downside Day does not, by itself, have any
long-term trend implications, since they often occur at the end of short-term
corrections. But, because they show that investors are in a mood to panic, even
an isolated 90% Downside Day should be viewed as an important warning that more
could follow.” So, today’s 90% down-volume action could be a bottom
signal...or not.
We also note that Thursday was a Bearish Outside Reversal
Day. This indicator has been a good one recently and now it’s bearish.
The S&P 500 closed below its 200-dMA. That is a worry
and a close below the 200-day Friday would be a trend-break sign and sell
signal.
On the bullish side (it is rare that all indicators lean
the same direction), Breadth vs S&P 500 is nearly giving a buy-signal.
The last time the Index tested its 50-dMA I was not
worried because Utilities were under performing the S&P 500. Today, that
was not the case. Utilities sold off, but only half as much as the index. Consumer Discretionary sold off much more
than the Index. These aren’t encouraging signs, especially if they continue.
If the S&P 500 can’t climb back above its 200-dMA on
Friday, I’ll trim my leveraged positions (QLD & SSO). (At least I’ll try
to; tomorrow will be another very busy day. I never trade using the phone (for
security reasons), so I’ll need to get to my laptop to sell anything.)
Tomorrow, I’ll look at the Friday run-down of indicators
and that should give me an idea of what further reductions in stocks (if any)
are warranted. Ensemble indicators are always better than looking at specific indicators.
Today, the daily spread of 20 Indicators (Bulls minus
Bears) declined from -1 to -6 (a positive number is bullish; negatives are
bearish); the 10-day smoothed sum that smooths the daily fluctuations declined
from +11 to +7. (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 HOLD: VOLUME is bearish; PRICE, VIX & SENTIMENT 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 neutral now and I am watching
indicators carefully.
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
THURSDAY MARKET INTERNALS
(NYSE DATA)
My basket of Market Internals remained SELL. (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 and I’ll reduce stock holdings if the S&P 500 can’t
close above the 200-dMA Friday.
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.
