Leading economic Indicators ... Michigan sentiment ... Industrial Production ... FED Stress Tests ... Momentum Trading DOW Stocks & ETFs … Stock Market Analysis ...

 “Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
In honor of St. Patrick’s Day: Here’s a medley from my old folk band, Dramtreeo. I played banjo with the group, but I was on guitar on these tracks: Banish Misfortune (Irish); followed by “Tae the Beggin’ (Scottish) and “Old Joe Clark (American)
https://www.youtube.com/watch?v=s5xuC-ffcEk
 
LEADING ECONOMIC INDICATORS
“Consumer confidence declined again in February. The decrease reflected large drops in confidence for households aged 35 to 54 and for households earning $35,000 or more...while 12-month inflation expectations improved—falling to 6.3 percent from 6.7 percent last month—consumers may be showing early signs of pulling back spending in the face of high prices and rising interest rates.” Press release at...
https://www.conferenceboard.org/data/utm_source=Google&utm_medium=CPC&utm_campaign=TCB&gclid=Cj0KCQjwn9CgBhDjARIsAD15h0AiSoluhXhw9Ty7umQ96vosVdIg1FvbwDCG587w-LRELqJyRddfB30aAq46EALw_wcB
 
MICHIGAN SENTIMENT (Univ of Michigan)
“Consumer sentiment fell for the first time in four months, sitting about 5% below February but remaining 7% above a year ago... Year-ahead inflation expectations receded from 4.1% in February to 3.8%, the lowest reading since April 2021, but remain well above the 2.3-3.0% range seen in the two years prior to the pandemic. Long-run inflation expectations edged down to 2.8%, falling below the narrow 2.9-3.1% range for only the second time in the last 20 months.” Press release at...
http://www.sca.isr.umich.edu/
 
INDUSTRIAL PRODUCTION (MarketWatch)
“U.S. industrial production was flat in February, the Federal Reserve reported Friday. The unchanged reading was in line with economists expectations, according to a survey by The Wall Street Journal.” Story at...
https://www.marketwatch.com/story/u-s-industrial-output-is-flat-in-february-6ffc967c
 
FED STRESS TESTS OVERLOOKED RISK OF RAPID RISE IN INTEREST RATES (Bloomberg)
“Fed officials have touted the annual stress tests as their marquee supervision method to evaluate the health and resilience of the country’s biggest banks.  But with two exceptions, in 2013 and 2015, the scenarios have almost exclusively modeled mild to severe recessions with declining inflation and nosediving short-term interest rates. That narrow range fails to capture the realities of the pandemic recovery, when nearly a year of rapid rate hikes eroded the value of bank portfolios like SVB’s.” Story at...
https://www.bloomberg.com/news/articles/2023-03-15/fed-s-key-bank-test-overlooked-interest-rate-risk-for-a-decade?leadSource=uverify%20wall
 
MARKET REPORT / ANALYSIS
-Friday the S&P 500 slipped about 1.1% to 3917. (Today’s close did not breach yesterday’s low.)
-VIX rose about 11% to 25.51.
-The yield on the 10-year Treasury slipped to 3.429%.
 
PULLBACK DATA:
-Drop from Top: 18.3% as of today. 25.4% max (on a closing basis).
-Trading Days since Top: 302-days.
The S&P 500 is 0.5% BELOW its 200-dMA & 2.3% 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 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.
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.)
 
If it’s not tech, it’s probably not working.
 
TODAY’S COMMENT:
Futures and Options expiration today pushed volumes up to extreme heights.  In addition, there were shifts in re-classifying some companies in new sectors. Those changes will affect ETFs. For example, Visa is moving from the Technology to the Financial sector. There are others as well.
 
These sorts of changes can make indicators less reliable so I will wait until next week before making any changes in stock allocations. I want to see some positive price action soon. We can’t like the S&P 500 below its 200-dMA!
 
Here’s this week’s Friday review of Indicators:
The Friday rundown of indicators moved further to the bear side this week (now 19-bear and 8-bull), and is now decidedly 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 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%.
-Overbought/Oversold Index (Advance/Decline Ratio) - Oversold.
-Sentiment. (Rydex investors are very bearish – a bullish sign.)
-The Smart Money (late-day action) is bullish, but not overly so.
-The long-term, 50-dEMA, Fosback Hi-Low Logic Index is bullish.
-The short-term, 10-dayEMA, Fosback Hi-Low Logic Index is neutral.
-There have been 7 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, I’ll put it in the bullish column for now. (If the S&P 500 was at the top of its upper trend line, I’d call it bearish.)
 
NEUTRAL
-Bollinger Bands – leaning bullish.
-RSI – leaning bullish.
-Issues advancing on the NYSE (Breadth) compared to the S&P 500.
-There was a 90% down-volume day 9. Another one will push this into the Bear category.
-There have been 4 up-days over the last 10 sessions – neutral.
-There have been 8 up-days over the last 20 sessions - neutral.
-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 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 above 50%, for 3 days in a row ending the “correction-now” signal.
-The Calm-before-the-Storm/Panic Indicator flashed a panic-buying signal 10 November - expired.
-The S&P 500 is 0.5% below its 200-dMA. (Bull indicator is 12% below 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.
-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 smoothed advancing volume on the NYSE is falling.
-The 10-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.
-MACD of S&P 500 price made a bearish crossover 10 Feb.
-My Money Trend indicator is falling.
-Slope of the 200-dMA is falling.
-Long-term new-high/new-low data.
-Short-term new-high/new-low data.
-Slope of the 40-dMA of New-highs is falling.
-McClellan Oscillator.
-The graph of the 100-day Count (the 100-day sum of up-days) is falling.
-VIX indicator.
-XLI-ETF (Cyclical Industrials) is underperforming the S&P 500.
-The 5-10-20 Timer System is SELL; the 5-dEMA and 10-dEMA are both below the 20-dEMA.
-The 5-day EMA is below the 10-day EMA so short-term momentum is bearish.
-33% of the 15-ETFs that I track have been up over the last 10-days. Bearish.
 
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 19 bear-signs and 8-Bull. Last week, there were 14 bear-sign and 10 bull-signs.
 
Today, the daily spread of 20 Indicators (Bulls minus Bears) declined from -4 to -7 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations declined from -16 to -30. (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: VIX & VOLUME are negative; PRICE is neutral; SENTIMENT is positive. (Sentiment may flip to neutral tonight depending on data I get later tonight.)
 
(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 leaning bearish. The S&P 500 has fallen below its 200-dMA; let’s see if it can break above it next week.
 
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 dropped to 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.
 
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.