Jobless Claims ... PPI ... Momentum Trading DOW Stocks & ETFs … Stock Market Analysis
Friday’s Blog will be posted on Saturday.
“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
“As a long-standing free speech advocate, the last few
years have been alarming and, frankly, depressing. The censorship efforts of
the government are, unfortunately, not new. However, what is new is the
support of the media and the Democratic Party in such censorship.” - Jonathan
Turley, Shapiro Chair for Public Interest Law at The George
Washington University Law School.
“If politicians stopped meddling with things they don't
understand, there would be a more drastic reduction in the size of government
than anyone in either party advocates.” - Thomas
Sowell
“Toyota has...discovered a technological breakthrough
with solid-state EV battery tech. The battery is expected to offer a 20%
improvement in cruising range. The automaker says it’s accelerating development
and aims for mass production from 2027 to 2028, targeting 20% more range and a
10-minute quick charge. A higher-performance version is under research and
development, which Toyota says will deliver 50% more cruising range, suggesting
it would be over 900 miles.”
https://electrek.co/2023/06/13/toyota-claims-solid-state-ev-battery-tech-breakthrough/
My cmt: 900-mile range; 10-minute charging; 300lbs
battery weight. These game changers could make electric vehicles more desirable
than gas powered. It points out again that
the Government has been wasting billions in tax credits and loans to failing EV
companies in technologies that aren’t really ready for the marketplace.
JOBLESS CLAIMS (Morningstar)
“Worker filings for unemployment benefits dropped last
week, a sign that the labor market remains solid. Initial claims, a proxy for
layoffs, declined 12,000 in the week ended July 8 to a seasonally adjusted
237,000...” Story at...
https://www.morningstar.com/news/dow-jones/202307135236/us-jobless-claims-fell-last-week-in-still-strong-labor-market
PPI (CNBC)
“The producer price index for June had a
smaller-than-expected increase, the Labor
Department reported Thursday, in the latest sign that inflation
is calming in the United States. The PPI for final demand rose 0.1%.” Story
at...
https://www.cnbc.com/2023/07/13/ppi-june-2023-wholesale-prices-rise-less-than-expected.html
YIELD CURVES – IS THIS TIME DIFFERENT? (RIA)
“If the yield curves stay inverted and credit spreads
remain tight, lending will likely be further curtailed. Such a poor lending
environment coupled with fading stimulus benefits could mean we are staring
down the barrel at another recession. The yield curve still matters! As noted
earlier, it typically takes 16 months from inversion to recession. A recession
could emerge as early as Thanksgiving, based on the average. We caution;
however, the pandemic recession and recovery have been incredibly unique in
their economic effects. We encourage humbleness. While a recession is likely,
there are still benefits of yesterday’s stimulus coursing through the economy,
which is incredibly difficult to estimate.” – Michael Lebowitz, CFA, Investment Analyst and Portfolio Manager
for RIA Advisors.
Commentary at...
https://realinvestmentadvice.com/treasury-yield-curves-is-this-inversion-different
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 rose about 0.9% to 4510.
-VIX was little changed at 13.55.
-The yield on the 10-year Treasury dipped to 3.768%.
PULLBACK DATA:
-Drop from Top: 6%. 25.4% max (on a closing basis).
-Trading Days since Top: 382-days.
The S&P 500 is 12% ABOVE its 200-dMA and 5.5% 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.
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:
A couple of new topping signs popped up today. Bollinger Bands are overbought. I usually ignore this signal unless RSI also
is overbought. RSI is not overbought so the Bollinger Bands indicator is less
important. Breadth, as measured by the advance decline ratio, is overbought. This indicator is older and probably not used
as much now. It often indicates a very short-term slide of a day or two so in
that sense, it does signal a top of sorts. We also have the S&P 500 now slightly
more than 12% above its own 200-dMA.
That is also an overbought indication.
If that weren’t enough, today, (Thursday) unchanged
volume was very high. As I’ve often said, many believe that this indicator
suggests investor confusion at market turning points. Given the other
indications, this may indeed be a turning point. And there’s more...The S&P
500 is still too far ahead of Breadth, another top indicator.
Combined with the chart (showing the Index above its
upper trend line) it appears that we are due for a retreat to the lower trend
line. I’ve been saying this for a while,
but we do see some more indicators agreeing with the charts. Usually, we see a big
up-day (statistically significant) at a top. Wednesday and Thursday have been
very close to a statistically significant move in price-volume, but they weren’t
big enough moves. Perhaps we’ll see some
more moves higher before the short-term top is in.
The S&P 500 is now about 2% higher than it was a
month ago when it reached its upper trend line. Will we finally see the short-term
top? We’ll see.
The daily spread of 20 Indicators (Bulls minus Bears) improved
from +7 to +9 (a positive number is bullish; negatives are bearish); the 10-day
smoothed sum that smooths the daily fluctuations improved from +28 to +34.
(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 & VOLUME are positive; SENTIMENT & VIX are neutral. (This
indicator ensemble is showing positive market conditions, but there may be a
better buying point ahead.)
(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
THURSDAY 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.
