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

 

“A majority of Democrats worry about President Biden's age and want another candidate.” – Michael Ramirez. Political commentary at...
https://michaelpramirez.com/index.html
...and another poll says two thirds of Americans “won’t or probably won’t” support Trump. That suggests that if the Democrats ran a moderate candidate (say Joe Manchin) they would demolish Trump with a 2 to 1 landslide-victory. Don’t worry, it won’t happen – the Democrats have thrown away moderation and the Republicans have thrown away sanity.
 
“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
MARKET REPORT / ANALYSIS
-Friday the S&P 500 rose about 0.1% to 4457.
-VIX dipped about 4% to 13.84.
-The yield on the 10-year Treasury rose to 4.271%.
 
PULLBACK DATA:
-Drop from Top: 7.1%. 25.4% max (on a closing basis).
-Trading Days since Top: 420-days.
The S&P 500 is 6.9% ABOVE its 200-dMA and 0.5% 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:
We look at a summary of indicators on Friday: The weekly rundown of indicators made a drastic improvement to the Bull side last week, this week it was less bullish (now 7-bear and 11-bull). I thought the indicators might have moved more to the Bear side so this is good news.
(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 10-dMA percentage of issues advancing on the NYSE (Breadth) is above 50%.
-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%.
-Smoothed Buying Pressure minus Selling Pressure is improving.
-MACD of S&P 500 price made a bullish crossover 29 August.
-Short-term new-high/new-low data.
-On average, the size of up-moves has been larger than the size of down-moves over the last month.
-There were back-to-back 80%+ up-volume days 28 & 29 Aug.
-The 5-10-20 Timer System is BUY.
-The 5-day EMA is above the 10-day EMA, so short-term momentum is bullish.
-56% of the 15-ETFs that I track have been up over the last 10-days. (45-55% is neutral.)
 
NEUTRAL
-There were Distribution Days on 5 & 7 Sept. – Not enough to send a signal.
-There have been 3 Statistically-Significant days (big moves in price-volume) in the last 15-days.
-Sentiment.
-Bollinger Band Squeeze 28 April - expired.
-Bollinger Bands.
-The 50-dMA percentage of issues advancing on the NYSE (Breadth) has not been below 50%, for more than 3 days in a row.
-Overbought/Oversold Index (Advance/Decline Ratio).
-Issues advancing on the NYSE (Breadth) compared to the S&P 500.
-10 August there was a Bullish Outside Reversal Day. Expired
-The S&P 500 is 7.2% above its 200-dMA. (Bear indicator is 12% above the 200-day.)
-The long-term, 50-dEMA, Fosback Hi-Low Logic Index.
-There was a Hindenburg Omen signal 6 Aug 2023 – expired. The McClellan Oscillator turned positive.
-The short-term, 10-day EMA, Fosback Hi-Low Logic Index is neutral.
-There have been 6 up-days over the last 10 sessions.
-There have been 9 up-days over the last 20 sessions.
-RSI.
-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 Smart Money (late-day action).
-VIX indicator.
-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; now 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).
-S&P 500 spread vs. Utilities (XLU-ETF) shows the Index outpacing Utilities, but the spread is fading so call this one neutral.
 
BEAR SIGNS
-MACD of the percentage of issues advancing on the NYSE (breadth) made a bearish crossover 8 September.
-My Money Trend indicator is falling.
-Long-term new-high/new-low data.
-Slope of the 40-dMA of New-highs is falling.
-McClellan Oscillator.
-The graph of the 100-day Count (the 100-day sum of up-days).
-The smoothed advancing volume on the NYSE is falling.

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 7 bear-signs and 11-Bull. Last week, there were zero bear-sign and 21 bull-signs.
 
The daily spread of 20 Indicators (Bulls minus Bears) improved from -4 to -3 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations improved from +24 to +30. (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: PRICE is Bullish; SENTIMENT, VIX & VOLUME 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 Bullish. The Friday Summary Indicators were still Bullish with a spread of +4. All of the major Breadth indicators are in good shape and I suspect the markets are too.
 
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 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 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.