CPI ... FED Beige Book ... EIA Crude Inventories ... Momentum Trading DOW Stocks & ETFs … Stock Market Analysis ...

 
“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
INFLATION BETTER THAN EXPECTED (CNBC)
“The consumer price index rose 3% on a year-over-year in June. Economists polled by Dow Jones expected a 3.1% increase. Month over month, the index rose 0.2% last month, also less than forecast. On top of that, core CPI — which strips out volatile food and energy prices — also rose less than expected...The market is pricing in an approximately 92% chance the Fed raises interest rates at the July meeting, according to CME’s FedWatch Tool.” Story at...
https://www.cnbc.com/2023/07/11/stock-market-today-live-updates.html
 
FED BEIGE BOOK (rttnews)
“Overall U.S. economic activity has increased slightly since late May, according to the Federal Reserve's Beige Book released Wednesday afternoon... "Overall economic expectations for the coming months generally continued to call for slow growth," the Beige Book said.” Story at...
https://www.rttnews.com/3375297/u-s-economic-activity-increasing-slightly-fed-s-beige-book-says.aspx
 
EIA CRUDE INVENTORIES (EIA)
“U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 5.9 million barrels from the previous week. k. At 458.1 million barrels, U.S. crude oil inventories are approximately 1% above the five year average for this time of year.”  Report at...
https://ir.eia.gov/wpsr/wpsrsummary.pdf
 
AUTOMAKERS SLAM BIDEN EXTREME EV PLAN (The Daily Caller via msn.com)
“Major automobile manufacturers criticized a Biden administration proposal to regulate emissions, warning that it would stress critical mineral supplies and require unrealistic levels of electric vehicle sales, Bloomberg reported Monday... ‘The Proposed Rule underestimates key challenges, including the scarcity of minerals to make batteries, the fact that these minerals are not mined or refined in the US, the inadequate infrastructure and the high cost of battery-electric vehicles,’ according to Toyota... such a policy would effectively create an electric car mandate and remove consumer choice...”
‘Unrealistic And Not Supported’: Major Automakers Slam Biden EPA’s ‘Extreme’ EV Plan (msn.com)
 
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 rose about 0.7% to 4472.
-VIX fell about 9% to 13.54.
-The yield on the 10-year Treasury dipped to 3.864%.
 
PULLBACK DATA:
-Drop from Top: 6.8%. 25.4% max (on a closing basis).
-Trading Days since Top: 381-days.
The S&P 500 is 11.2% ABOVE its 200-dMA and 4.7% 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:
CPI news was very good. While it was reported that the Core CPI still supported more FED rate hikes, I couldn’t disagree more.  Most of the CORE inflation report is due to Housing inflation and that is partially caused by FED rate hikes. The rate hikes have made it hard to trade up so more people are sitting rather than selling; supply is reduced causing prices to rise. Unfortunately, the Fed isn’t going to listen to me, and as the CNBC report above indicates, there is a very strong expectation that the Fed will hike again at their next meeting.
 
The chart is continuing to suggest weakness; the S&P 500 is again at its upper trend line again. The S&P 500 is now about 1% higher than it was a month ago when it reached its upper trend line.
 
The daily spread of 20 Indicators (Bulls minus Bears) remained +7 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations improved from +11 to +20. (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, still 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
 
WEDNESDAY MARKET INTERNALS (NYSE DATA)

My basket of Market Internals remained BUY. (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 as I did back in October.