Payroll Report ... Unemployment Rate ... Hourly Earnings ... Momentum Trading DOW Stocks & ETFs … Stock Market Analysis ...

 
“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
“Trump is arraigned on his Jan 6 and 2020 election indictment.” – Michael Ramirez. Political commentary at...
https://michaelramirez.substack.com/p/michael-ramirez-not-above-the-law?r=ntzh3&utm_campaign=post&utm_medium=web
 
PAYROLL REPORT / UNEMPLOYMENT RATE / AVG HOURLY EARNINGS (CNBC)
“Job growth in July was less than expected, pointing to a slower pace in the U.S. economy though perhaps not a long-anticipated recession, the Labor Department reported Friday. Nonfarm payrolls expanded by 187,000 for the month... The unemployment rate was 3.5%...Average hourly earnings, a key figure as the Federal Reserve fights inflation, rose 0.4% for the month...” Story at...
https://www.cnbc.com/2023/08/04/jobs-report-july-2023-187000-jobs-in-july.html
 
BIG FRIDAY (Heritage Capital)
“...more selling should be expected before the first short-term low is in. My tune remains the same. The bull market is alive and reasonably well. This pullback was one I started writing about last week as the calendar was about to turn. In our non-aggressive strategies, we raised some cash and pruned some positions, but nothing wholesale or major as I continue to believe this is a single digit decline that becomes interesting to buy at -5%. Right now, too many indices, sectors and stocks look like they should be sold into strength.” – Paul Schatz, President Heritage Capital. Commentary at...
https://investfortomorrow.com/blog/apple-amazon-and-employment-report-lead-to-a-big-friday/
 
MARKET REPORT / ANALYSIS
-Friday the S&P 500 was down about 0.5% to 4478.
-VIX rose about 7% to 17.10.
-The yield on the 10-year Treasury dipped to 4.046.
 
PULLBACK DATA:
-Drop from Top: 6.6%. 25.4% max (on a closing basis).
-Trading Days since Top: 398-days.
The S&P 500 is 9.3% ABOVE its 200-dMA (overbought) and 1.6% 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.
 
XLK – Technology ETF.
XLY - Consumer Discretionary ETF.
 
KRE – Regional Banking ETF, - I sold this Wednesday. It should not still be listed.
 
SHY – Short term bonds.
 
TODAY’S COMMENT:
 

All was well today until around 1pm. I didn’t see any news to account for the 1pm peak, but around 1:30pm, the chart showed a right shoulder formation completing a bearish Head-and-Shoulders pattern. That played out to the downside for the rest of the day. Apple got punished today on their weak forward guidance. Apple was down nearly 5% at the close. Utilities were down today, while Consumer Discretionary was up.  Those are odd sector moves for a down day - I’ll just ignore it.
 
Thursday, we noted that a lot of indicators reversed to neutral or bearish. That trend continued today. 
 
We look at a summary of indicators on Friday: The weekly rundown of indicators reversed to the Bear side (now 17-bear and 5-bull). That is a bearish indication, but there are still enough bull signs to keep me fully invested. (These indicators tend to be both long-term and short-term, so they are different than the 20 that I report on daily.) I am sitting on a fair amount of cash that I will put back in stocks at some  point as market conditions improve.
 
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.
-The 5-10-20 Timer System is BUY.
-S&P 500 spread vs. Utilities (XLU-ETF) shows the Index outpacing Utilities and the trend is up – for now, this one is bullish.
 
NEUTRAL
-There have been 2 Distribution Days, 27 July & 2 Aug, but 2 are not enough to send a signal
-There have been 4 Statistically-Significant days (big moves in price-volume) in the last 15-days.
-Sentiment.
-Bollinger Band Squeeze 28 April - expired.
-Bollinger Bands.
-The S&P 500 is 9.3% above its 200-dMA. (Bear indicator is 12% above the 200-day.)
-Overbought/Oversold Index (Advance/Decline Ratio).
-The graph of the 100-day Count (the 100-day sum of up-days).
-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 4 up-days over the last 10 sessions – neutral.
-There have been 12 up-days over the last 20 sessions - neutral.
-RSI was overbought on 26 July but is now neutral.
-There was a 90% down-volume day 9 March.
-There was a Hindenburg Omen signal 3 May 2023. The McClellan Oscillator turned positive 18 May. – Expired.
-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.
-XLI-ETF (Cyclical Industrials) is underperforming the S&P 500, but improving sharply – call it neutral.
-VIX indicator.
 
BEAR SIGNS
-The 10-dMA percentage of issues advancing on the NYSE (Breadth) is below 50%.
-The smoothed advancing volume on the NYSE is falling.
-MACD of the percentage of issues advancing on the NYSE (breadth) made a bearish crossover 3 August.
-Issues advancing on the NYSE (Breadth) compared to the S&P 500. This indicator has improved, but the bear sign from 1 Aug is extended for 5 days.
-Smoothed Buying Pressure minus Selling Pressure is falling.
-MACD of S&P 500 price made a bearish crossover 27 July.
-27 July there was a Bearish Outside Reversal Day. I’ll keep this in effect for 5 days and until the McClellan Oscillator turns bullish.
-My Money Trend indicator is falling.
-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 Calm-before-the-Storm/Panic Indicator flashed a top warning signal 1 August.
-The Smart Money (late-day action).
-On average, the size of up-moves has been larger than the size of down-moves over the last month, but not enough to send a signal.
-The 5-day EMA is below the 10-day EMA so short-term momentum is bearish.
-43% of the 15-ETFs that I track have been up over the last 10-days. (45-55% is neutral.)
 
On Monday’s update of the Friday summary of indicators (20 December 2021), 9 days before the top of the 25% correction, there were 21 bear-signs and zero bull-signs. Now there are 17 bear-signs and 5-Bull. Last week, there were 6 bear-sign and 17 bull-signs.
 
The daily spread of 20 Indicators (Bulls minus Bears) improved from -8 to -7 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations declined from -19 to -31. (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, VIX, VOLUME & SENTIMENT 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 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 (underway) is needed to bring the markets back into balance. I’ll go back to an over-invested position later, probably the S&P 500 drops below the 50-dMA but probably not to the 100-dMA.
 
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 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’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.