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

 
“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
RULEMAKING BY GOVERNMENT AGENCIES (WSJ)
“The high court last week said it would reconsider Chevron v. Natural Resources Defense Council, a 1984 Supreme Court opinion that gives regulators legal cover to interpret ambiguous—and sometimes outdated—statutes... Justice Neil Gorsuch, who as an appeals court judge in 2016 said the doctrine ‘permit[s] executive bureaucracies to swallow huge amounts of core judicial and legislative power and concentrate federal power in a way that seems more than a little difficult to square with the Constitution of the framers’ design.’” Story at...
https://www.wsj.com/articles/the-supreme-court-case-that-could-threaten-the-secs-climate-disclosure-rule-84ace2dc
The ability of Federal Agencies to make rules concentrates power in the Executive Branch and leads to actions that were unintended by the Congress. For example, the language of Endangered Species Act is designed to prevent the extinction of a species. But the Fish & Wildlife Service has promulgated rules, that have the power of law, to close popular areas of Cape Hatteras National Seashore due to the presence of a few Piping Plover. The Piping Plover is a New England bird that does not do well in the heat of North Carolina. Bird populations have gone down, not up, after the closures at Hatteras. The F&WS has even designated the Seashore as Critical Habitat for the Piping Plover even though there are fewer than a half dozen birds in the entire 70-mile long Seashore. The rules damage the economy at Cape Hatteras for no gain in bird populations.
 
This is just one example with which I am familiar. The scope of rulemaking and its effects are huge.
 
“Government regulations set the standards for almost every aspect of American life, and, as Rosenbloom (2014, p. 64) concludes, “The scope of federal rulemaking is astounding.” Each year, US agencies issue rules governing such critical policy topics as air quality, financial markets, highways, foreign aid, food stamps, power production, and toxic chemicals. As an example of their scope, the US Food and Drug Administration (FDA) regulates in the areas of medical devices, cosmetics, animal testing, tobacco, and nutrition labeling. Its reach is so broad that FDA-regulated products account for about 20 cents of every dollar spent by American consumers (US FDA 2011). Across all federal agencies, Crews (2016a) estimates the total costs of regulation at about $15,000 per US household in 2015, which is almost as much as the average US household spends on food and transportation combined.” From...
https://www.annualreviews.org/doi/10.1146/annurev-polisci-050817-092302
 
MICROSOFT BIG AI PUSH COULD POWER MSFT GROWTH (Barron’s)
“Microsoft’s (MSFT)  big push into artificial-intelligence software could eventually drive the company past Amazon.com’s (AMZN)   Amazon Web Services as the leading cloud-computing company, according to Bernstein analyst Mark Moerdler. In a super-bullish note Tuesday, the analyst outlook for Microsoft’s position in the rapidly emerging AI software market.” Story at...
https://www.barrons.com/articles/microsoft-stock-aws-ai-bing-9b9143c0?siteid=yhoof2
 
BOEING GETS A BIG JET ORDER (CNBC)
“Ryanair said it plans to buy at least 150 Boeing 737 Max 10 planes with options for 150 more, after a price dispute derailed negotiations for the large order in 2021. It’s the budget carrier’s biggest order and the manufacturer’s latest sizable deal for new planes as airlines replace aging jets and grow their fleets.” Story at...
https://www.cnbc.com/2023/05/09/ryanair-boeing-plane-order-for-737-10-max.html
 
PAUSE TO REFRESH (Heritage Capital)
“The longer stocks can go without pulling back after some big gains, the more likely there is more upside ahead...Markets are pausing, but there isn’t much to glean yet. The NASDAQ 100 has broken out. The S&P 500 is close. The Dow Industrials have some more work. The winners keep winning and the laggards keep lagging.” Commentary at...
https://investfortomorrow.com/blog/pause-to-refresh-but-hanging-in-as-media-discovers-russell-problem/
 
THE ELECTRIC DREAM IS A NIGHTMARE – IN BRITAIN (Telegraph via msn)
“...the rollout of electric cars isn’t quite going to plan, is it? By the end of the decade it will be illegal to buy a new petrol car, but that doesn’t mean we’ve thought through the consequences. There were always obvious problems with the technology: the electricity has to come from somewhere, and Britain isn’t installing enough chargers to meet government targets...It now turns out that some bridges may not be able to take the weight of electric cars which, due to their large battery packs, are heavier than their petrol equivalents... A further issue is what happens when an electric car hits a pedestrian or a cyclist. Because they’re so heavy, the impact can be worse than that of a normal car.” Story at...
The electric vehicle dream has turned into a nightmare (msn.com)
 
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 declined about 0.5% to 4119.
-VIX rose about 4% to 17.6.
-The yield on the 10-year Treasury remained 3.513%.
 
PULLBACK DATA:
-Drop from Top: 14.1%. 25.4% max (on a closing basis).
-Trading Days since Top: 338-days.
The S&P 500 is 3.7% ABOVE its 200-dMA and 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 and we called a buy on 4 October 2022.
 
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.
XLK – Technology ETF.
XLE – Energy Sector ETF. It been sagging recently on lower oil prices. 
 
BA – Boeing reported 4/26/2023. It had good numbers and gave good guidance.  BA bounced on the news and bounced again today, but still has been disappointing. I planned to sell it and buy Microsoft which I expect will outperform Boeing - Haven’t done it yet. I may just add MSFT when this current malaise ends.  It probably depends on CPI / PPI this week.
 
XLY - Consumer Discretionary ETF.
KRE – Regional Banking ETF. This is a very small position for me.
SHY – Short term bonds. 30-day yield is 4%. (Trailing 1-year yield is 1.6%.) I’ll hold this, but if the market retests the lows, I’ll sell it and buy stocks.)
 
TODAY’S COMMENT:
Today, (Tuesday) unchanged volume was very high. As I’ve often said, many believe that this indicator suggests investor confusion at market turning points. If this is a turning point, it is not clear which way the market will turn.  The S&P 500 has been nearly flat for at least 2 months. With CPI tomorrow, it may just be indicating investor confusion. Indicators haven’t changed much, but I think the trend is slightly up.
 
Friday, the daily spread of 20 Indicators (Bulls minus Bears) remained +4 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations improved from -44 to -32. (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: PRICE & VIX are positive; SENTIMENT & VOLUME 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 still a cautious Bull. Indicators are not that bad, in spite of the Hindenburg Omen last 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
 
TUESDAY MARKET INTERNALS (NYSE DATA)

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.) 
 

...My current invested position is about 65% 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.