Flash PMI ... Home Sales ... Crude Inventories ... Momentum Trading DOW Stocks & ETFs … Stock Market Analysis ...

 

Political commentary at...
https://michaelpramirez.com/index.html
 
“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
COMPOSITE GLOBAL FLASH PMI (S&P Global)
“The headline S&P Global Flash US PMI Composite Output Index indicated only a fractional increase in output across the private sector midway through the third quarter. At 50.4 in August, down from 52.0 in July, the latest reading signalled the weakest upturn in activity since February. Persistent challenges stimulating demand in the manufacturing sector were accompanied by slower growth in service sector output.” Press release at...
https://www.pmi.spglobal.com/Public/Home/PressRelease/3bfc5a90d9d2416a8f6709f78f90d014
 
NEW HOME SALES (NY Post)
“Sales of new single-family homes rose in July as an acute shortage of existing homes drove buyers to new units — but prices dropped by nearly 10%. New home sales shot up 4.4%...” Story at... 
https://nypost.com/2023/08/23/new-home-sales-soar-in-july-amid-supply-shortage-but-prices-drop/
 
EIA CRUDE INVENTORIES (EIA)
“U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 6.1 million barrels from the previous week. At 433.5 million barrels, U.S. crude oil inventories are about 2% below the five year average for this time of year.” Story at...
https://ir.eia.gov/wpsr/wpsrsummary.pdf
 
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 rose about 1.1% to 4436.
-VIX slipped about 6% to 15.98.
-The yield on the 10-year Treasury dipped to 4.189
 
PULLBACK DATA:
-Drop from Top: 8.5%. 25.4% max (on a closing basis).
-Trading Days since Top: 411-days.
The S&P 500 is 7.2% ABOVE its 200-dMA and 0.5% BELOW 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.
 
XLK – Technology ETF (holding since the October lows).
XLY - Consumer Discretionary ETF. (Holding since the October lows - I bought more XLY Monday.)
SPY – I bought the S&P 500 Friday in my 401k (it has limited choices).
XLE – Added Tuesday.
 
TODAY’S COMMENT:
Today, advancers outpaced decliners by a lot.  Breadth hasn’t been this bullish on a daily basis in the last 3 weeks. The 10-day value improved too.  I follow the 50-dMA of advancing issues (breadth). If the 50-dMA of issues advancing on the NYSE is below 50% for three days running, I consider it a correction warning.  In this recent 5% downturn, I didn’t have a single value below 50%. Unlike big corrections, where I get a strong bottom indicator, we need to look at the hints the market gives. The clues are suggesting that the weakness is ending.  I had originally guessed that the pullback would not exceed the 50-dMA of the S&P 500.  The Index did fall a little below that value, but it still follows the general idea of a small correction.
 
That said, Wednesday was a statistically significant up-day. That just means that the price-volume move exceeded my statistical parameters. Statistics show that a statistically-significant, up-day is followed by a down-day about 60% of the time. 
 
Wednesday was also a Follow-thru day. From Quantified Strategies...
“A follow-through day is a key concept in the market-timing system designed to help you identify a change in general market direction from a downtrend or market correction to a new rally. A follow-through day occurs during a market correction when a major index closes significantly higher than the previous day, and in greater volume. It happens on Day 4 or later of an attempted rally.” From...
https://www.quantifiedstrategies.com/follow-through-day/#:~:text=A%20follow%2Dthrough%20day%20occurs,later%20of%20an%20attempted%20rally.
The bottom was 3 and 4 days ago at 4370 on the S&P 500.
 
The daily spread of 20 Indicators (Bulls minus Bears) declined from -2 to -4 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations improved from -56 to -54. (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: VOLUME is bearish; VIX, PRICE & SENTIMENT are neutral. There are a lot of oversold signs suggesting markets may be in the vicinity of an oversold bottom.
 
(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 21 December, 9 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 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 as I did back in October.