Leading Economic Indicators ... Jobless Claims ... Philadelphia Fed Index Momentum Trading DOW Stocks & ETFs … Stock Market Analysis ...

 
“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
LEADING ECONOMIC INDICATORS (Conference Board)
“...(LEI) for the U.S. declined by 0.4 percent in July 2023 to 105.8 (2016=100), following a decline of 0.7 percent in June...The US LEI—which tracks where the economy is heading—fell for the sixteenth consecutive month in July, signaling the outlook remains highly uncertain... The leading index continues to suggest that economic activity is likely to decelerate and descend into mild contraction in the months ahead. The Conference Board now forecasts a short and shallow recession in the Q4 2023 to Q1 2024 timespan.”
https://www.conference-board.org/topics/us-leading-indicators
 
JOBLESS CLAIMS (Morningstar)
“Worker filings for unemployment benefits declined last week, a sign the labor market remains strong. Initial claims, a proxy for layoffs, decreased by 11,000 to a seasonally adjusted 239,000 in the week ended Aug. 12, the Labor Department said Thursday.” Press release at...
https://www.morningstar.com/news/dow-jones/202308174895/jobless-claims-fell-last-week-trending-near-historic-lows
 
PHILADELPHIA FED INDEX (UPI)
“U.S. manufacturing is back, with a gauge of regional activity rebounding in August to show its first positive reading in nearly a year, the Federal Reserve Bank of Philadelphia said Thursday.” Story at...
https://www.upi.com/Top_News/US/2023/08/17/philly-fed-manufacturing-index/1081692290634/
 
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 fell about 0.8% to 4370.
-VIX rose about 7% to 17.89.
-The yield on the 10-year Treasury dipped to 4.252
 
PULLBACK DATA:
-Drop from Top: 8.9%. 25.4% max (on a closing basis).
-Trading Days since Top: 407-days.
The S&P 500 is 5.9% ABOVE its 200-dMA and 1.8% 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.
XLY - Consumer Discretionary ETF.
 
SHY – Short term bonds.
 
TODAY’S COMMENT:
The S&P 500 has had 13 days since the recent high with only 3 up days in that period. As a Wall Street pro once said, “...we could be in one of these “selling stampedes” that tend to last 17 – 25 sessions, with only 1.5- to three-day pauses/throwback rallies, before they exhaust themselves on the downside...once the markets get into one of these weekly downside skeins, they rarely bottom on a Friday. Nope, they typically give participants over the weekend to brood about their losses and then they show up the next Monday in “sell mode” leading to Turning Tuesday.”
 
The timing is close and we do see some bullish signs. Bollinger Bands were oversold, today, Thursday along with RSI. With the 50-dEMA Foasback Logic indicator also bullish, I have a bottom indication.  This signal does not always indicate the exact bottom (sometimes it’s not even close), but it does suggest that markets may be in the vicinity of a bottom.
 
The S&P 500 is less than 2% above its 100-dMA so it would not be a surprise to see a bottom on Friday or even Monday if the market follows the “rarely on Friday” rule for bottoms.
 
The daily spread of 20 Indicators (Bulls minus Bears) declined from -6 to -7 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations improved from -71 to -70. (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 declined to SELL: VOLUME & VIX are bearish; PRICE & SENTIMENT are neutral. I won’t sell now. 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. The pullback that was needed to bring the markets back into balance may be winding down. A big down-day is needed to signal the final flush out. I'll probably add to stock holdings tomorrow, and I definitely will add a significant % if tomorrow is a large down-day (about 1% down).  
 
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 SELL. (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 50% stocks, including stock mutual funds and ETFs. I do have a fair amount of cash on hand.  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.