“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
“What the welfare system and other kinds of governmental
programs are doing is paying people to fail. Insofar as they fail, they receive
the money; insofar as they succeed, even to a moderate extent, the money is
taken away.” - senior fellow at
the Hoover Institution.
“The current push by government to get people to buy
electric vehicles reminds me of the story about a huge pet food company that
developed a new type of dog food. They spent millions on developing and
marketing, but the campaign fell flat and the product sat on the shelves. They
brought in all of their top salespeople to find the problem. At the meeting, a
small voice from the back spoke up and said: “The dogs don’t like it.” - Doug Helland, WSJ Letters (31 Aug 2023).
“States are scrambling to find ways to keep child-care
centers afloat after billions in Covid-relief funding run out next month...”
WSJ at... https://www.wsj.com/us-news/education/as-pandemic-funds-expire-child-care-centers-struggle-to-survive-6cefdf5b
My comment: Our Government continues to give away money for a crisis that ended a year ago.
JOBLESS CLAIMS (ABC News)
“U.S. applications for unemployment benefits fell slightly last week...The number of Americans applying for jobless benefits last fell week by 4,000, to 228,000 the week ending August 26...” Story at...
https://abcnews.go.com/Business/wireStory/us-applications-jobless-claims-inch-back-companies-hold-102831184
PERSONAL SPENDING (USA Today)
“Consumers boosted their spending rapidly in July and price pressures remained modest, signs of continued U.S. economic strength amid rising interest rates... Household spending, the primary driver of economic growth, rose a robust 0.8% in July...” Story at...
https://www.wsj.com/economy/consumer-spending-personal-income-inflation-july-2023-f9ca1e14
PCE PRICES
“An inflation measure that’s watched closely by the Federal Reserve edged higher in July...Consumer prices increased 3.3% from a year earlier, above the 3% pace in June but below the 40-year high of 7% in June 2022...” Story at...
https://www.usatoday.com/story/money/2023/08/31/july-pce-inflation-report-today/70723559007/
CHICAGO PMI (invezz.com)
“The indicator zoomed to 48.7, well above market expectations and the previous month’s reading of 42.8, but continued to remain in contractionary territory.” Story at...
https://invezz.com/news/2023/08/31/chicago-pmi-surprises-to-the-upside-philadelphia-fed-gdpplus-indicates-q422-recession/
NICE BOUNCE BUT NOT CONVINCING (Heritage Capital)
“If my thesis regarding the pullback remains correct, the rally should end sooner than later... Interestingly, the bounce has not only not turned our indicators and models more positive, it has done the exact opposite. Our most aggressive models continue to lighten up and reduce exposure. We will see if that is just a one or two day thing or something more meaningful.” – Paul Schatz, President Heritage Capital.
My cmt: Paul and I are usually in agreement, so I’m a little concerned about his comment posted Wednesday.
PULLBACK DATA:
-Drop from Top: 5.9%. 25.4% max (on a closing basis).
-Trading Days since Top: 417-days.
The S&P 500 is 8.4% ABOVE its 200-dMA and 0.9% 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:
XLK – Technology ETF (holding since the October lows).
SPY – I bought a large position in the S&P 500 Friday, 8/14, in my 401k (it has limited choices).
XLY - Consumer Discretionary ETF. (Holding since the October lows - I bought more XLY Monday, 8/21.)
XLE – Added Tuesday, 8/22.
SSO – 2x S&P 500 ETF.
TODAY’S COMMENT:
After 4 positive days in a row, the markets were due for a down day. Breaking with the trend, VIX fell. The options players were not concerned with today’s selloff.
I was surprised to see that Rydex investors have gotten
very bearish in a hurry, thus driving Sentiment down to near a Buy signal. Sentiment
has been a pretty good signal recently, so this is another sign that we may
have seen the end of the recent weakness that led to a 5% pullback.
The daily spread of 20 Indicators (Bulls minus Bears) declined
from +14 to +11 (a positive number is bullish; negatives are bearish); the
10-day smoothed sum that smooths the daily fluctuations improved from -17
to +1. (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 Bullish; VIX & SENTIMENT are neutral. SENTIMENT
is nearly giving a bullish signal because Rydex investors turned very bullish.
(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 am Bullish. Indicators continue to improve.
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.)
WSJ at... https://www.wsj.com/us-news/education/as-pandemic-funds-expire-child-care-centers-struggle-to-survive-6cefdf5b
My comment: Our Government continues to give away money for a crisis that ended a year ago.
“U.S. applications for unemployment benefits fell slightly last week...The number of Americans applying for jobless benefits last fell week by 4,000, to 228,000 the week ending August 26...” Story at...
https://abcnews.go.com/Business/wireStory/us-applications-jobless-claims-inch-back-companies-hold-102831184
“Consumers boosted their spending rapidly in July and price pressures remained modest, signs of continued U.S. economic strength amid rising interest rates... Household spending, the primary driver of economic growth, rose a robust 0.8% in July...” Story at...
https://www.wsj.com/economy/consumer-spending-personal-income-inflation-july-2023-f9ca1e14
“An inflation measure that’s watched closely by the Federal Reserve edged higher in July...Consumer prices increased 3.3% from a year earlier, above the 3% pace in June but below the 40-year high of 7% in June 2022...” Story at...
https://www.usatoday.com/story/money/2023/08/31/july-pce-inflation-report-today/70723559007/
“The indicator zoomed to 48.7, well above market expectations and the previous month’s reading of 42.8, but continued to remain in contractionary territory.” Story at...
https://invezz.com/news/2023/08/31/chicago-pmi-surprises-to-the-upside-philadelphia-fed-gdpplus-indicates-q422-recession/
“If my thesis regarding the pullback remains correct, the rally should end sooner than later... Interestingly, the bounce has not only not turned our indicators and models more positive, it has done the exact opposite. Our most aggressive models continue to lighten up and reduce exposure. We will see if that is just a one or two day thing or something more meaningful.” – Paul Schatz, President Heritage Capital.
My cmt: Paul and I are usually in agreement, so I’m a little concerned about his comment posted Wednesday.
-Drop from Top: 5.9%. 25.4% max (on a closing basis).
-Trading Days since Top: 417-days.
The S&P 500 is 8.4% ABOVE its 200-dMA and 0.9% 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.
XLK – Technology ETF (holding since the October lows).
SPY – I bought a large position in the S&P 500 Friday, 8/14, in my 401k (it has limited choices).
XLY - Consumer Discretionary ETF. (Holding since the October lows - I bought more XLY Monday, 8/21.)
XLE – Added Tuesday, 8/22.
SSO – 2x S&P 500 ETF.
After 4 positive days in a row, the markets were due for a down day. Breaking with the trend, VIX fell. The options players were not concerned with today’s selloff.
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 30 momentum ranking follows:
For more details, see NTSM Page at…
https://navigatethestockmarket.blogspot.com/p/a-system-for-trading-dow-30-stocks-my_8.html
