LEI ... Jobless Claims ... Philly FED Index ... Existing Home Sales ... 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)
“The
Conference Board Leading Economic Index® (LEI) for the
U.S. declined by 0.4 percent in August 2023 to 105.4 (2016=100), following a
decline of 0.3 percent in July....“With August’s decline, the US Leading
Economic Index has now fallen for nearly a year and a half straight, indicating
the economy is heading into a challenging growth period and possible recession
over the next year,” said Justyna
Zabinska-La Monica, Senior Manager, Business Cycle Indicators, at The
Conference Board.” Press release
at...
https://www.conference-board.org/topics/us-leading-indicators/press/us-lei-sept-2023
JOBLESS CLAIMS (AP News)
“U.S. applications for jobless claims fell by 20,000 to
201,000 for the week ending Sept. 16, the Labor Department reported Thursday.
That’s the lowest figure since the last week of January.” Story at...
https://apnews.com/article/unemployment-benefits-jobless-claims-layoffs-labor-d78adb118e3165d18e4f6edafeb7aba6
PHILADELPHIA FED INDEX (Morningstar)
“Manufacturing activity in the Philadelphia area
contracted in September, a lower reading than expected, indicating further
weakening of the region's industrial sector. The Federal Reserve Bank of
Philadelphia said Thursday that its index for current general activity was
minus 13.5 in September--returning the same level as July--compared with a
positive reading of 12 in August. It marked the index's 14th negative reading
in the past 16 months, after August's measure snapped 11 months of contractions
in the index.” Story at...
https://www.morningstar.com/news/dow-jones/202309214495/philly-feds-district-factory-activity-contracted-in-september
EXISTING HOME SALES (Nat’l Assoc of Realtors)
“Existing-home sales retreated 0.7% in August to a
seasonally adjusted annual rate of 4.04 million. Sales dropped 15.3% from one
year ago.” Story at...
https://www.nar.realtor/newsroom/existing-home-sales-decreased-0-7-in-august
My cmt: Higher interest rates are having an effect.
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 fell about 1.6% to 4333.
-VIX rose about 11% to 16.86.
-The yield on the 10-year Treasury rose to 4.494%.
PULLBACK DATA:
-Drop from Top: 9.7%. 25.4% max (on a closing basis).
-Trading Days since Top: 431-days.
The S&P 500 is 3.4% ABOVE its 200-dMA and 3.4%
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:
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. Added 8/24.
CSCO – added 9/5.
TODAY’S COMMENT:
There was a lot of breakage today. The S&P 500 broke its
lower trend line going back to March of this year. The Index Broke its 100-dMA
at 4375 and its August low of 4370. The close today sits just above the June
low of 4329 so there is some support there.
Today was very close to a 90% down-volume day. On further
consideration, it is probably close enough at 89.6% down-volume. Typically, 1
high, down-volume day is not too much to worry about. I’ll be concerned if we see another one soon.
Since the short-term trendline is broken, we need to look
at a longer period. The lower trendline going
back to last October is a strong level of support. That point is now around 4200-4300 depending
on how fast the Index falls. That may be
a likely worst case for this retreat, as a best guess - it’s just a guess,
though. Still, there was some good news today.
Thursday was a statistically significant down-day. That
just means that the price-volume move exceeded my statistical parameters.
Statistics show that a statistically-significant, down-day is followed by an up-day
about 60% of the time.
In addition, there were some bottom signs flashing; Both Bollinger
Bands and RSI were oversold. That is a legitimate Bottom Signal. Further, the
7-day Rate of Change for VIX hit +18. Around
+20 is associated with an “oversold bottom that is worthy of a bounce”
according to Tom McClellan so that may be close enough.
It looks like a bottom, but I’d be much more confident if
the indicators were stronger, i.e., we could use some more bottom signs. Still,
given the bottom indicators we do have, it is likely that the markets are close
to a bottom if they haven’t already bottomed today. We may have to wait until turn-around
Tuesday.
The daily spread of 20 Indicators (Bulls minus Bears) declined
from -3 to -7 (a positive number is bullish; negatives are bearish); the 10-day
smoothed sum that smooths the daily fluctuations declined from -37 to -40.
(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 remains
HOLD: VOLUME is bearish; PRICE, SENTIMENT & VIX 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.)
I’ll review a summary of indicators tomorrow, as we always
do on Friday. That may look pretty ugly and leave me with an uncomfortable
decision.
For now, due to Bottom Indicators, I am hanging on.
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 75% stocks, including stock mutual funds and ETFs. I’m
usually about 50% invested in stocks. I’m “over invested” now expecting new,
all-time highs this year. That burns all the cash. I have about 25% of the portfolio in bonds.
I trade about 15-20% of the
total portfolio using the momentum-based analysis I provide here. When I see a
definitive bottom, I add a lot more stocks to the portfolio using an S&P
500 ETF as I did back in October.
