Navigate the Stock Market: June 2023

Friday, June 30, 2023

PCE Prices ... Personal Income ... Momentum Trading DOW Stocks & ETFs … Stock Market Analysis ...

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

LOOKOUT – JANE FONDA SENT ME ON ANOTHER GLOBAL WARMING RANT!
“We’ve got about seven, eight years to cut ourselves in half of what we use of fossil fuels, and unfortunately, the people that have the least responsibility for it are hit the hardest ...We have to arrest and jail those men — they’re all men [behind this]... White men are the things that matter, and then everything else [is] at the bottom.... There’d be no climate crisis if it wasn’t for racism.” – Jane Fonda
...Jane Fonda has apologized numerous times for the actions that earned her the nickname “Hanoi Jane” during the Vietnam War. Maybe if she lives another 50-years she’ll apologize for her Global-Warming-lunacy.

My cmt: The Earth’s temperature has risen 1 degree centigrade in the last 100 years. It doesn’t seem likely that we have only 7 or 8 years to cut fossil fuel use in half, especially since we are hearing this from global know-it-all, Jane Fonda.

If Global Warming is an existential threat, it can be easily reversed by increasing the Earth’s albedo. “It appears that stratospheric aerosol injection, at a moderate intensity, could counter most changes to temperature and precipitation, take effect rapidly, have low direct implementation costs, and be reversible in its direct climatic effects.” - Climate Intervention: Reflecting Sunlight to Cool Earth. Washington, D.C.: National Academies Press.
I expect my Grandchildren will not have to worry about man-made climate change. If the promise of safe, cheap energy from nuclear fusion is borne out, we’ll be able to reverse global warming attributable to CO2 in the relatively near future. Technologies now exist to remove CO2 from the atmosphere. Unfortunately, that won’t stop non-manmade global warming – the last Ice Age was 12,000 years ago and the Earth has been warming since then – Sorry Greta, sea-level rise will continue.

And BTW, climate change is not causing fires in Canada. If increased temperatures were the cause of fires, wouldn’t we be having more forest fires where it is warmer than Canada – say, southern forests in the Virginias, Tennessee, Georgia, etc.? As stated in “Unsettled – What Climate Science Tells us, What it Doesn’t, and Why it Matters” by Steven Koonin, PhD, the actual numbers show fewer fires in more recent decades, not more. (Remember, climate is defined in 30-year slices by the IPCC. These one-year events are weather – not climate.) Man-made, Global warming is real, but I get very tired of every anomaly being blamed on Global Warming. (The latest was mountain landslides, but I’ll save that one for another rant.)

My apologies to those who wanted to read a Financial Blog.

PERSONAL INCOME (Advisor Perspectives)
“Personal income (excluding transfer receipts) rose 0.4% in May and is up 5.5% year-over-year. However, when adjusted for inflation using the BEA's PCE Price Index, real personal income (excluding transfer receipts) was up 0.3% month-over-month and 1.6% year-over-year...” [It is believed that the NBER Bases its recession decisions on the Big Four: Retail sales, Industrial production, Employment and Real income] Here is a percent-off-high chart based on an average of the big four. The average set a new all-time high in November of 2018 [recessions in grey].”

Chart and analysis at
https://www.advisorperspectives.com/dshort/updates/2023/06/30/personal-income-big-four-economic-indicators-rises-may?topic=covid-19-coronavirus-coverage

PCE PRICES / / PERSONAL SPENDING (Reuters)
“U.S. consumer spending fizzled in May as households cut back on purchases of new light trucks and other long-lasting manufactured goods amid higher borrowing costs, suggesting the economy lost some speed in the second quarter...underlying price pressures remained too strong to discourage the Federal Reserve from returning to its strategy of raising interest rates in July, economists said... Excluding the volatile food and energy components, the PCE price index climbed 0.3% after rising 0.4% in the prior month. The so-called core PCE price index increased 4.6% on a year-on-year basis in May after advancing 4.7% in April.
https://www.reuters.com/markets/us/us-consumer-spending-edges-up-may-inflation-still-high-2023-06-30/

MARKET REPORT / ANALYSIS
-Friday the S&P 500 rose about 1.2% to 4450.
-VIX rose about 0.4% to 13.59. (The Options Players may not be so sanguine about the rally.)
-The yield on the 10-year Treasury slipped to 3.836%.

PULLBACK DATA:
-Drop from Top: 7.2%. 25.4% max (on a closing basis).
-Trading Days since Top: 374-days.
The S&P 500 is 11.2% ABOVE its 200-dMA and 5.3% 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 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.

MSFT – Microsoft.
XLK – Technology ETF.
XLY - Consumer Discretionary ETF.

KRE – Regional Banking ETF. This is a very small position for me. KRE tested the May 4 low of 36.08 on much lower volume 11 & 12 May.
I haven’t sold yet. On the positive side, it has not breached its recent low around 36.

SHY – Short term bonds. 30-day yield is 5.04% - 9 June 2023. (Trailing 1-year yield is 3.04%.) Once this weak period ends, I’ll sell SHY and buy stocks/stock ETFs.

TODAY’S COMMENT:
10 Trading days ago, on 15 June, RSI, Bollinger Bands, Breadth-vs-the-S&P 500 and my Money Trend indicator all suggested a short-term top and it was a statistically significant up-day. The S&P 500 was 4426.

After a 2-week, weak period the S&P 500 has shrugged off its malaise and again climbed to its upper trend line (going back to the October lows) and closed slightly higher at 4450.

Today, Friday was another statistically significant up-day. That just means that the price-volume move exceeded my statistical parameters. Statistics show that a statistically-significant, up-day is followed by a down-day about 60% of the time. Tops almost always occur on Statistically-significant, up-days, but not all statistically-significant, up-days occur at tops. Today could be a short-term top, but, unlike 2-weeks ago, there are now only 2 top indicators that are bearish and that is not a strong top signal. If the markets continue to make big moves up next week, we’ll see more weakness in the markets. We could still see a pullback, or alternatively, the Index may crawl along the upper trend-line for a while longer.

The S&P 500 remains stretched too far ahead of breadth, so I still expect weakness in the Index. The catch is, this one indicator alone is not enough to call a top and the Friday summary of Indicators has improved a lot.

This above discussion helps explain why I have pointed out that short-term trading is a fool’s game. Mr. Market doesn’t always follow indicators – mine or anyone else’s, especially when we are projecting a small pullback.

Here’s my weekly review of indicators:
The weekly rundown of indicators reversed to the Bull side (now 8-bear and 14-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
-Today (30 June) was a Follow-thru day that cancels prior Distribution Days.
-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%.
-My Money Trend indicator is rising.
-McClellan Oscillator.
-The long-term, 50-dEMA, Fosback Hi-Low Logic Index.
-Slope of the 40-dMA of New-highs is rising.
-The Smart Money (late-day action).
-On average, the size of up-moves has been larger than the size of down-moves over the last month.
-VIX indicator.
-The 5-10-20 Timer System is BUY.
-The 5-day EMA is above the 10-day EMA so short-term momentum is bullish.
-S&P 500 spread vs. Utilities (XLU-ETF) shows the Index outpacing Utilities.

NEUTRAL
-There have been 1 Statistically-Significant days (big moves in price-volume) in the last 15-days.
-Sentiment.
-Bollinger Band Squeeze 28 April - expired.
-Bollinger Bands.
-The 50-dMA percentage of issues advancing on the NYSE (Breadth) has not been below 50%, for more than 3 days in a row.
-Overbought/Oversold Index (Advance/Decline Ratio).
-There was a Zweig Breadth Thrust 31 March. That’s a rare, very-bullish sign, but the McClellan Oscillator subsequently turned negative, so this indicator has expired.
-The S&P 500 is 11.2% above its 200-dMA. (Bear indicator is 12% above the 200-day.)
-The short-term, 10-day EMA, Fosback Hi-Low Logic Index is neutral.
-There have been 4 up-days over the last 10 sessions – neutral.
-There have been 12 up-days over the last 20 sessions - neutral.
-The graph of the 100-day Count (the 100-day sum of up-days) is neutral.
-RSI
-There was a 90% down-volume day 9 March.
-There was a Hindenburg Omen signal 3 May 2023. The McClellan Oscillator turned positive 18 May. – Expired.
-The Calm-before-the-Storm/Panic Indicator flashed a panic-buying signal 10 November - 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.
-10 May there was a Bullish Outside Reversal Day – Expired.

BEAR SIGNS
-The smoothed advancing volume on the NYSE is falling.
-Issues advancing on the NYSE (Breadth) compared to the S&P 500. The Index is too far ahead of Breadth.
-Smoothed Buying Pressure minus Selling Pressure is falling.
-MACD of S&P 500 price made a bearish crossover 26 May
-Long-term new-high/new-low data.
-Short-term new-high/new-low data.
-XLI-ETF (Cyclical Industrials) is underperforming the S&P 500; the trend direction is flat to slightly down.
-45% of the 15-ETFs that I track have been up over the last 10-days.

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 8 bear-signs and 14-Bull. Last week, there were 13 bear-sign and 8 bull-signs.

The daily spread of 20 Indicators (Bulls minus Bears) remained from +4 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations declined from -28 to -29. (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 remain a cautious Bull, expecting a decline of around 4-5% on the S&P 500 to start soon.

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 remained HOLD. (My basket of Market Internals is 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 55% 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, June 29, 2023

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

Friday will be a busy day, so I’ll post Friday’s Blog late Friday or on Saturday.

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

JOBLESS CLAIMS (NY Post)
“The number of Americans filing new claims for unemployment benefits fell last week by the most in 20 months, offering an upbeat picture of the labor market that could see the Federal Reserve continuing to raise interest rates to cool demand.” Story at...
https://nypost.com/2023/06/29/jobless-claims-post-biggest-drop-in-20-months/

GDP (CNBC)
“Gross domestic product increased at a 2% annualized pace for the January-through-March period, up from the previous estimate of 1.3%...”Story at...
https://www.cnbc.com/2023/06/29/first-quarter-economic-growth-was-actually-2percent-up-from-1point3percent-first-reported-in-major-gdp-revision.html

MARKET REPORT / ANALYSIS
-Thursday the S&P 500 rose about 5% to 4396.
-VIX rose about 0.8% to 13.54.
-The yield on the 10-year Treasury rose to 3.846%.

PULLBACK DATA:
-Drop from Top: 8.3%. 25.4% max (on a closing basis).
-Trading Days since Top: 372-days.
The S&P 500 is 9.9% ABOVE its 200-dMA and 4.2% 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 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.

MSFT – Microsoft.
XLK – Technology ETF.
XLY - Consumer Discretionary ETF.

KRE – Regional Banking ETF. This is a very small position for me. KRE tested the May 4 low of 36.08 on much lower volume 11 & 12 May.
I haven’t sold yet. On the positive side, it has not breached its recent low around 36.

SHY – Short term bonds. 30-day yield is 5.04% - 9 June 2023. (Trailing 1-year yield is 3.04%.) Once this weak period ends, I’ll sell SHY and buy stocks/stock ETFs.

TODAY’S COMMENT:
Well, so much for a decline. 9 Trading days ago, on 15 June, RSI, Bollinger Bands, Breadth-vs-the-S&P 500 and my Money Trend indicator all suggested a short-term top. The S&P 500 was 4426. For now, that remains the short-term top, while some of the warnings that suggested a decline have waned.

However, I still have warning signs flashing. I think the most significant one is that Breadth (issues advancing on the NYSE) compared to the S&P 500 shows that the Index is too far ahead of the market in general. This usually leads to a decline of some kind. In this case I expect a decline toward the 50-dMA. So far, the Index declined to about 3% above the 50-day a couple of days ago. I’d expect it to be within 1%. Will it make it? We’ll see.

The daily spread of 20 Indicators (Bulls minus Bears) improved from -5 to +4 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations declined from -25 to -28. (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 & 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 remain a cautious Bull, expecting a decline of around 3% on the S&P 500.

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

My basket of Market Internals improved to HOLD. (My basket of Market Internals is 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, June 28, 2023

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

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

EIA CRUDE OIL INVENTORIES (EIA)
“U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 9.6 million barrels from the previous week. At 453.7 million barrels, U.S. crude oil inventories are approximately 1% below the five year average for this time of year.” Report at...
https://ir.eia.gov/wpsr/wpsrsummary.pdf

ANNUAL ENERGY OUTLOOK (EIA)
“High international demand leads to continued growth in U.S. production, and combined with relatively little growth in domestic consumption, allows the United States to remain a net exporter of petroleum products and natural gas through 2050 in all AEO2023 cases. Despite no significant change in the domestic consumption of petroleum and other liquids through 2040 across most AEO2023 cases, we expect U.S. production to remain at historically high volumes. Domestic natural gas consumption also remains relatively stable, despite a shift in electricity generation towards renewables. Production of natural gas, however, continues to grow in response to international demand for liquefied natural gas.” Press release at...
https://www.eia.gov/pressroom/releases/press529.php

CHEVROLET JUST KILLED THE 40,000 SILVERADO ELECTRIC TRUCK (msn.com)
“...the forthcoming 2024 Silverado electric truck... starting price for the Work Truck, or WT version [was]... $40,000.
...But now, Chevrolet has announced its WT EV pricing. The starting price is radically higher than stated in the original hype since its reveal in January 2022. In fact, the price has almost doubled. Now, the base price for the Silverado 3WT is $74,800.” Story at...
Chevrolet Just Killed the $40,000 Silverado Electric Truck (msn.com)

FORD LOSES NEARLY 60,000 FOR EVERY ELECTRIC VEHICLE SOLD (The Street.com)
“Ford (F) only delivered 12,000 electric vehicles in the first quarter, which means that the carmaker lost $58,333 for each clean car sold during this period... Last month, the Blue Oval said it expects an operating loss of $3 billion for Ford Model e this year.”
https://www.thestreet.com/technology/ford-loses-nearly-60000-for-every-electric-vehicle-sold
Don’t worry. We taxpayers have loaned Ford 3-billion dollars to build a battery plant.

MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 dipped about 1 point to 4377.
-VIX slipped about 2% to 13.43.
-The yield on the 10-year Treasury was 3.713%.

PULLBACK DATA:
-Drop from Top: 8.8%. 25.4% max (on a closing basis).
-Trading Days since Top: 372-days.
The S&P 500 is 9.5% ABOVE its 200-dMA and 3.8% 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.

MSFT – Microsoft.
XLK – Technology ETF.
XLY - Consumer Discretionary ETF.

KRE – Regional Banking ETF. This is a very small position for me. KRE tested the May 4 low of 36.08 on much lower volume 11 & 12 May.
I’ll probably sell this position – it has been very weak recently. But I forgot to! In my defense - it is a small position. On the positive side, it has not breached its recent low around 36.

SHY – Short term bonds. 30-day yield is 5.04% - 9 June 2023. (Trailing 1-year yield is 3.04%.) Once this weak period ends, I’ll sell SHY and buy stocks/stock ETFs.

TODAY’S COMMENT:
Not much change from yesterday – I still am expecting a decline toward the 50-dMA.

The daily spread of 20 Indicators (Bulls minus Bears) declined from -2 to -5 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations declined from -13 to -25. (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: PRICE is positive; SENTIMENT, VIX & 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 remain a cautious Bull, expecting a decline of another 2-3% on the S&P 500.

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

My basket of Market Internals slipped to SELL. (My basket of Market Internals is 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, June 27, 2023

Consumer Confidence ... Durable Orders ... New Home Sales ... Momentum Trading DOW Stocks & ETFs … Stock Market Analysis ...

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

“What we’ve done in our politics is create a situation where we’re electing idiots...And so I don’t look at it through the lens of like, you know, is this what I should do or what I shouldn’t do? I look at it through the lens of how do we elect serious people? And I think electing serious people can’t be partisan.” – Liz Cheny, former GOP Representative (WY)

“The Supreme Court on Tuesday rejected the theory that state legislatures have almost unlimited power to decide the rules for federal elections and draw partisan congressional maps without interference from state courts. The Constitution’s Elections Clause “does not insulate state legislatures from the ordinary exercise of state judicial review,” Chief Justice John G. Roberts Jr. wrote in a 6 to 3 decision.” Story at...
Supreme Court rejects theory that would have meant radical changes to election rules (msn.com)

“If the [super volcano in Italy] ...erupts, it could launch molten rock and volcanic gases high into the stratosphere. It could lead to 100ft tsunamis, leading sulfur, and toxic ash to spread causing fears it could destroy crops and wildlife, plunging the Earth into a global winter.” Story at...
Supervolcano 'on verge of eruption' and could spark mass extinction and nuclear winter (msn.com)
Mass extinction and nuclear winter? Time to concentrate on short-term investments! This could be good news though – we won’t have to listen to Global Warming hype anymore.

DURABLE ORDERS (RTT News)
“Reflecting a continued spike in orders for transportation equipment, the Commerce Department released a report on Tuesday showing an unexpected surge in new orders for U.S. manufactured durable goods in the month of May. The Commerce Department said durable goods orders shot up by 1.7 percent in May...” Story at...
https://www.rttnews.com/3372440/u-s-durable-goods-orders-unexpectedly-jump-in-may-as-aircraft-demand-soars.aspx

CONSUMER CONFIDENCE (Conference Board via prnewswire)
"’Consumer confidence improved in June to its highest level since January 2022, reflecting improved current conditions and a pop in expectations,’ said Dana Peterson, Chief Economist at The Conference Board... ‘Although the Expectations Index remained a hair below the threshold signaling recession ahead, a new measure found considerably fewer consumers now expect a recession in the next 12 months compared to May.” Press release at...
https://www.prnewswire.com/news-releases/us-consumer-confidence-improved-substantially-in-june-301864485.html

NEW HOME SALES (CNN)
“New home sales surged in May, as buyers looked to new construction as an alternative to the low inventory of existing homes for sale. Sales of newly constructed homes were up 12.2% in May from April, and up 20% from a year ago...” Story at...
https://www.cnn.com/2023/06/27/homes/new-home-sales-may/index.html

WHAT HISTORY SAYS ABOUT THE 2ND HALF (MarketWatch)
“If history is any indication, investors may have reason to be even more optimistic about the next six months, according to Thomas Lee, founder of Fundstrat Global Advisors. In the 22 instances when the S&P 500 finished the first half of the year more than 10% higher since 1950, the median return for the second half is 8% with a 82% win ratio, according to Fundstrat’s data.
The stock market is headed for a big first-half gain. What history says that means for the rest of 2023. (msn.com)

ELECTRIC VEHICLE CALAMITY (The Telegraph)
“...our obsession with centrally planned decarbonisation is causing all sorts of unintended consequences. Electric vehicles put a massive stress on roads: last month it was reported that their sheer weight could sink our bridges. The batteries are heavy, with many popular models weighing more than two tonnes, and while that might be fine for motorways built for big lorries, on smaller roads it has put huge strain on surfaces of many highways. They are literally buckling under the pressure [creating a pothole crisis]...
... Everyone accepts that we need to combat climate change... But it needs to be properly planned and well-executed. Instead we don’t have enough chargers for all the EVs we are expected to buy. We don’t generate enough electricity to power them all up, And now it turns out that our roads are woefully unprepared for all the extra strain that will be put on them.” Story at...
Time to slam the brakes on the electric vehicle calamity (msn.com)

MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 rose about 1.2% to 4378.
-VIX slipped about 3% to 13.77.
-The yield on the 10-year Treasury rose to 3.767%.

PULLBACK DATA:
-Drop from Top: 8.7%. 25.4% max (on a closing basis).
-Trading Days since Top: 372-days.
The S&P 500 is 9.6% ABOVE its 200-dMA and 4% 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.

MSFT – Microsoft.
XLK – Technology ETF.
XLY - Consumer Discretionary ETF.

KRE – Regional Banking ETF. This is a very small position for me. KRE tested the May 4 low of 36.08 on much lower volume 11 & 12 May.
I’ll probably sell this position – it has been very weak recently. But I forgot to! In my defense - it is a small position. On the positive side, it has not breached its recent low around 36.

SHY – Short term bonds. 30-day yield is 5.04% - 9 June 2023. (Trailing 1-year yield is 3.04%.) Once this weak period ends, I’ll sell SHY and buy stocks/stock ETFs.

TODAY’S COMMENT:
I don’t think the weak period is over for the stock market. Buying Pressure minus Selling Pressure is still on the sell side; my Money Trend indicator also remains bearish.

On a cautionary note: short-term trading is a fool’s game and I may not be able to identify a good buying point. That said, I think the time to buy will be when there is a statistically significant day and the Index is near its 50-dMA (now about 4210 on the S&P 500).

A new disconcerting issue arrived today: Sentiment is very high and close to issuing a sell signal. I measure Sentiment as a 5-day moving average of %-Bulls (Bulls/{bulls+bears}) based on the amounts invested in Rydex/Guggenheim mutual funds.

It is currently at 90%-bulls (as of Monday’s close). On a standard deviation basis this again close to levels seen during the dot.com crash. This isn’t by itself a great indicator since sentiment can remain elevated for some time, but it is a level that has preceded pullbacks of varying degrees – from small pullbacks of a couple % to major crashes. I’d need to see more negative signs to take action, but it is a cautionary indication.

I’ll stick with my suggestion that the S&P 500 is most likely to decline about 3-4% below today’s close. I’d be surprised if the Index drops below its 50-dMA, but it certainly could happen.

The daily spread of 20 Indicators (Bulls minus Bears) improved from -9 to -2 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations declined from -3 to -13. (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: PRICE is positive; SENTIMENT, VIX & 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 remain a cautious Bull, expecting a decline of another 3-4% on the S&P 500.

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

..My current invested position is about 55% 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.

Monday, June 26, 2023

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

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

“As math and reading scores plummet, perhaps public education should focus on teaching fundamentals.” - Michael Ramirez.

“...the demand from figures like former Sen. Claire McCaskill (D-Mo.) for people to “back off” on the story [by whistleblowers that there was interference in the Hunter Biden investigation] is being heeded by some in the media, in again blacking out or downplaying the story. While many of us have stressed the need to authenticate these statements, Hunter Biden has notably not denied that he sent the message and the allegations from the investigation have self-verifying elements. The news blackout again raises concerns over a de facto state media in the United States that operates by consent rather than coercion. This is a major story either way it turns out but networks and newspapers are again showing a distinct lack of curiosity.” Jonathon Turley.
https://jonathanturley.org/2023/06/24/everybody-needs-to-back-off-the-media-and-political-figures-continue-to-ignore-the-biden-corruption-scandal/

CASS FREIGHT INDEX (CASS Information Systems)
“The shipments component of the Cass Freight Index® rose 1.9% m/m in May, but fell 0.8% m/m in seasonally adjusted (SA) terms and fell 5.6% y/y. While it was a softer-than-normal seasonal increase from April, it was nonetheless an increase.
Freight markets continue to work through a downcycle which featured its first y/y decline 17 months ago. The past three downcycles have ranged from 21 to 28 months.
Declining real retail sales trends and ongoing destocking remain the primary headwinds to freight volumes, but dynamics are shifting as real incomes improve and the worst of the destock is in the rearview.”
https://www.cassinfo.com/freight-audit-payment/cass-transportation-indexes/may-2023
Freight doesn’t seem to support the recession call that many pundits continue to make. This could change, of course, but for now, recession is not in sight.

BEARISH TREND PLAYING OUT (Heritage Capital)
“I do not believe the bull market has ended. Let’s get that out of the way. I don’t even think this phase of the rally has ended. As we all know, the stock market has seen a really nice move over the past month, especially in the NASDAQ 100. No secrets there. This looks to me like a normal, healthy and telegraphed mild pullback. And one that I would be a buyer of for another run to new highs in early July.” - Paul Schatz, President Heritage Capital. Commentary at...
https://investfortomorrow.com/blog/bearish-trend-playing-out-bonds-need-to-shape-up/

MARKET REPORT / ANALYSIS
-Monday the S&P 500 dropped about 0.5% to 4329.
-VIX rose about 6% to 14.25.
-The yield on the 10-year Treasury dipped to 3.724%.

PULLBACK DATA:
-Drop from Top: 9.8%. 25.4% max (on a closing basis).
-Trading Days since Top: 370-days.
The S&P 500 is 8.4% ABOVE its 200-dMA and 2.9% 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.

MSFT – Microsoft.
XLK – Technology ETF.
XLY - Consumer Discretionary ETF.

KRE – Regional Banking ETF. This is a very small position for me. KRE tested the May 4 low of 36.08 on much lower volume 11 & 12 May.
I said earlier that I’ll probably sell this position – it has been very weak recently. But I forgot to and I haven't sold yet - in my defense, it is a small position.

SHY – Short term bonds. 30-day yield is 5.04% - 9 June 2023. (Trailing 1-year yield is 3.04%.) Once this weak period ends, I’ll sell SHY and buy stocks/stock ETFs.

TODAY’S COMMENT:
The close wasn’t pretty (late-day, sell-off) and a couple of other bear signs popped up, too.

MACD (Moving Average Convergence Divergence) switched to a bear signal today. The 50-dMA of issues advancing on the NYSE has been down for more than 3 sessions. That’s my definition of a correction. Ok, but I still don’t expect a large pullback.

Repeating: While my Friday summary of indicators last Friday was well to the Bear side, some of the bull indicators are reasonably reliable. This tends to bolster the view that the current pullback is likely to be small. The markets do not appear to be starting a major correction, so I’ll stick with my suggestion that the S&P 500 is most likely to decline about 2-3% below today’s close. I’d be surprised if the Index drops below its 50-dMA, but it certainly could happen.

The daily spread of 20 Indicators (Bulls minus Bears) declined from -8 to -9 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations declined 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 declined to HOLD: PRICE is positive; SENTIMENT, VIX & 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 remain a cautious Bull, expecting a decline of another 2-3% on the S&P 500.

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)

My basket of Market Internals remained SELL. (My basket of Market Internals is 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.)