ISM Non-Manufacturing Index ... Factory Orders ... Momentum Trading DOW Stocks & ETFs … Stock Market Analysis ...
“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
ISM NON-MANUFACTURING INDEX (ISM)
“In May, the Services PMI® registered 50.3 percent,
1.6 percentage points lower than April’s reading of 51.9 percent. The composite
index indicated growth in May for the fifth consecutive month after a reading
of 49.2 percent in December, which was the first contraction since May 2020
(45.4 percent)...The majority of respondents indicate that business conditions
are currently stable; however, there are concerns relative to the slowing
economy.” Report at...
https://www.ismworld.org/supply-management-news-and-reports/reports/ism-report-on-business/services/may/
FACTORY ORDERS (Reuters)
“Factory orders increased 0.4% after a 0.6% gain in
March, the Commerce Department said on Monday. Economists polled by Reuters had
forecast orders would rise 0.8%. Orders increased 1.4% through April from a
year earlier.” Story at...
https://www.reuters.com/markets/us/us-factory-orders-rise-april-2023-06-05/
MARKET REPORT / ANALYSIS
-Monday the S&P 500 dipped about 0.2% to 4274.
-VIX rose about 1% to 14.73.
-The yield on the 10-year Treasury rose to 3.702%.
PULLBACK DATA:
-Drop from Top: 10.9%. 25.4% max (on a closing basis).
-Trading Days since Top: 356-days.
The S&P 500 is 7.5% ABOVE its 200-dMA and 3.5%
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.
XLE – Energy Sector ETF. XLE tested its March low on 16
May on lower volume so I continue to hold it.
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.
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:
I was too busy today to do anything in the markets. Based
on Friday’s bullish indicator summary, it still looks like the right move is to
add to stock holdings. Most indicators remain bullish, but not all.
As noted Friday, top indicators are close to issuing a
top-warning suggesting that the S&P 500 may be due for a 3-5% pullback. Bollinger Bands remain
overbought; Issues advancing on the NYSE (Breadth) compared to the
S&P 500 are also in bear mode.
The daily spread of 20 Indicators (Bulls minus Bears) improved
from +5 to +1 (a positive number is bullish; negatives are bearish); the 10-day
smoothed sum that smooths the daily fluctuations declined from -30 to -35.
(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 slipped
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 Bull and I’ll add to stock
holdings this week unless there are more top-signs. If so, I’ll hold off a
little for a better buy-point.
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
MONDAY MARKET INTERNALS (NYSE
DATA)
My basket of Market Internals declined to 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.
