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:

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 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.) 
 

..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.