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

 
“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
WHAT WILL THE BEARS SAY NOW – EXCERPT (Heritage Capital)
“I sense a lot of embarrassed bears are feeling the pressure to buy. First, they were hiding behind recession, the Fed and scary monsters. Then they cried about the narrow market being led by only 7 stocks. What will they say now? I think they have to start or continue throwing in the towel. They are woefully behind the 8 ball after five months in defensive portfolios. Their jobs are on the line.”  - Paul Schatz, President, Heritage Capital. Commentary at...
https://investfortomorrow.com/blog/what-will-the-bears-say-now/
 
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 rose about 0.2% to 4284.
-VIX dipped about 5% to 13.96.
-The yield on the 10-year Treasury rose to 3.702%.
 
PULLBACK DATA:
-Drop from Top: 10.7%. 25.4% max (on a closing basis).
-Trading Days since Top: 357-days.
The S&P 500 is 7.8% ABOVE its 200-dMA and 3.6% 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:
Here’s a chart of Buying Pressure minus Selling Pressure in Red (smoothed line in green).  The S&P 500 is the black line. Buying pressure is outpacing selling pressure so the Buying Pressure curve is above zero. The general trend is up too, so this is a bullish indicator. We also note that the S&P 500 chart (black) has moved to the upper quarter of the trend line bands.
 

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.
 
Now RSI is getting moving close to an overbought indication.  When RSI and Bollinger Bands are overbought, we usually see a pullback. At this time, I don’t expect anything more than a small decline, down to the lower trend line.
 
The daily spread of 20 Indicators (Bulls minus Bears) improved from +1 to +8 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations improved from -35 to -26. (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 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
 
TUESDAY MARKET INTERNALS (NYSE DATA)

My basket of Market Internals improved to BUY. (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.