More FED Hikes ... Core Inflation Remains Sticky ... Momentum Trading DOW Stocks & ETFs … Stock Market Analysis ...
“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
CORE INFLATION REMAINS STICKY (MishTalk)
Chart and discussion at...
https://mishtalk.com/economics/cpi-inflation-has-dropped-dramatically-but-core-cpi-and-core-pce-inflation-are-dropping-very-slowly/
POWELL EXPECTS MORE FED RATE HIKES AHEAD (CNBC)
“Inflation has moderated somewhat since the middle of
last year,” he said. “Nonetheless, inflation pressures continue to run high,
and the process of getting inflation back down to 2% has a long way to go.” ...Powell
also noted that getting inflation lower will require slowing down the economy
to below-trend growth... [He] affirmed that more interest rate increases
are likely ahead until additional progress is made on bringing down inflation.”
Story at...
https://www.cnbc.com/2023/06/21/powell-expects-more-fed-rate-hikes-ahead-as-inflation-fight-has-a-long-way-to-go.html
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 slipped about 0.5% to 4366.
-VIX fell about 5% to 13.20.
-The yield on the 10-year Treasury was little changed at
3.725%.
PULLBACK DATA:
-Drop from Top: 9%. 25.4% max (on a closing basis).
-Trading Days since Top: 367-days.
The S&P 500 is 9.5% 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.
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:
Powell’s assertion that more rate hikes are necessary, is
not really a surprise – the expectation for another rate hike in July was above
50%. It’s a worry though - his statement
looks more bearish than may have been expected by markets. In the end, though, we
need to watch market reaction rather than worry about the news. The close today
wasn’t particularly encouraging as the Index fell nearly 0.5% in the last hour
or so of trading.
Based on my indicators last week, it looks like the
S&P 500 will see a about a 4% drop from today’s close over the next few
weeks. I am suggesting a small decline, because, so far, indicators are not too
bearish. That could always change.
The daily spread of 20 Indicators (Bulls minus Bears) declined
from -1 to -5 (a positive number is bullish; negatives are bearish); the 10-day
smoothed sum that smooths the daily fluctuations declined from +57 to +44.
(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, VOLUME & VIX 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.
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
WEDNESDAY 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.
