Small Business Optimism ... Momentum Trading DOW Stocks & ETFs … Stock Market Analysis ...

 
“The problem isn't that Johnny can't read. The problem isn't even that Johnny can't think. The problem is that Johnny doesn't know what thinking is; he confuses it with feeling.” - Thomas Sowell, senior fellow at the Hoover Institution.
 
"These are the types of rulings that signal a dangerous creep toward authoritarianism and centralization of power in the courts...In fact, we have members of the court themselves with Justice Elena Kagan saying that the court is beginning to assume the power of a legislature." – Alexandria Ocasio-Cortez, United States Representative.
 
"They [Democrats] bemoan a conservative majority [in the Supreme Court] that puts jurisprudence above politics. Well, the evidence suggests that anyone who expects the court to function as a mere extension of legislative power is bound to be disappointed...This latest term demonstrates that no party wins or loses before the Supreme Court every time...The court adheres to the Constitution and weighs each case on its merits. It should continue to do exactly that." – Mitch McConnel, Minority Leader of the United States Senate

“For decades we disagreed with [Supreme] Court rulings when progressives held sway, but we never called the Court illegitimate. But now that the left has lost the Court as a backup legislature for its policy goals, the institution is supposedly broken. Tell us again who is the threat to democratic institutions?” – WSJ Editorial Board.
 
SMALL BUSINESS OPTIMISM (NFIB)

"NFIB’s Small Business Optimism Index increased 1.6 points in June to 91.0, however, it is the 18th consecutive month below the 49-year average of 98. Inflation and labor quality are tied as the top small business concerns with 24% of owners reporting each as their single most important problem... “Halfway through the year, small business owners remain very pessimistic about future business conditions and their sales prospects,” said NFIB Chief Economist Bill Dunkelberg.” Press release at...
https://www.nfib.com/surveys/small-business-economic-trends/?gclid=CjwKCAjw-7OlBhB8EiwAnoOEkzJTj7PrELTZLZwzN77EYj7an_hV6xj60nyoeey8yVtdnthUSlXrEBoCQDQQAvD_BwE
 
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 rose about 0.7% to 4439.
-VIX fell about 2% to 14.84.
-The yield on the 10-year Treasury dipped to 3.965%.
 
PULLBACK DATA:
-Drop from Top: 7.4%. 25.4% max (on a closing basis).
-Trading Days since Top: 380-days.
The S&P 500 is 10.5% ABOVE its 200-dMA and 4.1% 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:
Not much new today.  Indicators are more bullish, both long and short term. All eyes are on the CPI report to be released at 8:30am Wednesday. Tom Lee urged investors to load up on stocks ahead of the report, because he expects lower inflation will fuel a rally. It could also fuel a blow-off top or a sell-the-news response starting that small pullback we have been expecting for a while.  We’ll see...
 
The daily spread of 20 Indicators (Bulls minus Bears) rose from +1 to +7 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations improved from -5 to +4. (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
 
TUESDAY 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.