Momentum Trading DOW Stocks & ETFs … Stock Market Analysis ...

 
“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.

Political commentary at...
https://michaelpramirez.com/index.html
 
“The Wall Street Journal reports today that Hawaiian Electric knew for years that the combination of unsecured power lines and invasive dry brush was causing a huge spike in wildfires, but instead of investing resources in securing power lines and clearing brush, the company spent millions trying to meet Democratic Party-created renewable energy mandates instead. “The growing risk of wildfire on Maui had been known for years,” the WSJ reports. ‘The number of acres burned on the island soared to 39,000 in 2019, from 150 in 1999.’” – Washington Examiner
Climate activists are getting people killed (msn.com)
 
MARKET REPORT / ANALYSIS
-Friday the S&P 500 was little changed at 4370.
-VIX slipped about 0.4% to 17.3.
-The yield on the 10-year Treasury was 4.253
 
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 5.8% ABOVE its 200-dMA and 1.9% 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. SOLD 18 August
 
TODAY’S COMMENT:
I think the S&P 500 is close to a bottom, but I doubt that it has made a low yet. Maybe that will be Monday or even the following Monday, based on history. I did get bottom calls yesterday, Thursday. As a result, I increased stock holdings somewhat.
 
Today, 18 August, there was high, unchanged-volume. As I’ve often said, many believe that this indicator suggests investor confusion at market turning points. This is not in my system (because it gives a lot of false signals), but given other indications, this may indeed be a turning point. The Index is about 2% below its 50-dMA, reasonably close to where we might expect the pullback might end.
 
We look at a summary of indicators on Friday: The weekly rundown of indicators were little changed – a few more Bull signs; a few more Bear signs (now 16-bear and 8-bull). (These indicators tend to be both long-term and short-term, so they are different than the 20 that I report on daily.)
 
BULL SIGNS
-The 50-dMA percentage of issues advancing on the NYSE (Breadth) is above 50%.
-The 100-dMA percentage of issues advancing on the NYSE (Breadth) is above 50%.
-The long-term, 50-dEMA, Fosback Hi-Low Logic Index.
-XLI-ETF (Cyclical Industrials) is slightly outperforming the S&P 500 – call it bullish.
-The smoothed advancing volume on the NYSE is rising.
-RSI.
-There have been 7 up-days over the last 20 sessions - bullish.
-The Smart Money (late-day action).
 
NEUTRAL
-10 August there was a Bullish Outside Reversal Day. Expired
-There have been 4 Distribution Days recently, but not enough to send a signal
-There have been 2 Statistically-Significant days (big moves in price-volume) in the last 15-days.
-Sentiment.
-Bollinger Band Squeeze 28 April - expired.
-Bollinger Bands turned neutral today.
-The S&P 500 is 5.8% above its 200-dMA. (Bear indicator is 12% above the 200-day.)
-Overbought/Oversold Index (Advance/Decline Ratio).
-Issues advancing on the NYSE (Breadth) compared to the S&P 500.
-The 50-dMA percentage of issues advancing on the NYSE (Breadth) has not been below 50%, for more than 3 days in a row.
-There was a Zweig Breadth Thrust 31 March. That’s a rare, very-bullish sign, but the McClellan Oscillator subsequently turned negative, so this indicator has expired.
-The short-term, 10-day EMA, Fosback Hi-Low Logic Index is neutral.
-There have been 3 up-days over the last 10 sessions – neutral.
-On average, the size of up-moves has been smaller than the size of down-moves over the last month, but not enough to send a signal.
-The Calm-before-the-Storm/Panic Indicator flashed a top warning signal 31 July & 1 August. That looks like it was the short-term top.
-There was a 90% down-volume day 9 March.
-2.8% of all issues traded on the NYSE made new, 52-week highs when the S&P 500 made a new all-time-high, 3 January 2022. (There is no bullish signal for this indicator.) This indicated that the advance was too narrow and a correction was likely to be >10%. It proved correct, but is now Expired.
 
BEAR SIGNS
-My Money Trend indicator is falling.
-VIX indicator.
-There was a Hindenburg Omen signal 6 Aug 2023. This remains in effect until the McClellan Oscillator turns positive.
-The 10-dMA percentage of issues advancing on the NYSE (Breadth) is below 50%.
-MACD of the percentage of issues advancing on the NYSE (breadth) made a bearish crossover 3 August.
-Smoothed Buying Pressure minus Selling Pressure is falling.
-MACD of S&P 500 price made a bearish crossover 27 July.
-Long-term new-high/new-low data.
-Short-term new-high/new-low data.
-McClellan Oscillator.
-Slope of the 40-dMA of New-highs is falling.
-The graph of the 100-day Count (the 100-day sum of up-days).
-The 5-10-20 Timer System is SELL.
-The 5-day EMA is below the 10-day EMA so short-term momentum is bearish.
-37% of the 15-ETFs that I track have been up over the last 10-days. (45-55% is neutral.)
-S&P 500 spread vs. Utilities (XLU-ETF) shows the Index outpacing Utilities but the trend has been down.
 
On Monday’s update of the Friday summary of indicators (20 December 2021), 9 days before the top of the current 25% correction, there were 21 bear-signs and zero bull-signs. Now there are 16 bear-signs and 8-Bull. Last week, there were 14 bear-sign and 6 bull-signs.
 
The daily spread of 20 Indicators (Bulls minus Bears) improved from -7 to 4 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations improved from -70 to -67. (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 HOLD: VIX is bearish; VOLUME, 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. The correction may not be over, but markets are getting closer to a bottom. The 100-dMA is now about 4300. The lower trend line (going back to the October 22 lows) is around 4200. It is not likely we’ll see a low much lower than 4200-4300.
 
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
 
FRIDAY MARKET INTERNALS (NYSE DATA)

My basket of Market Internals improved to 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 60% 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.