Chicago PMI ... Employment Cost Index ... Consumer Confidence ... Momentum Trading DOW Stocks & ETFs … Stock Market Analysis ...

 
“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
A MIX OF OPINIONS:
-“The recent sell-off in stocks might spook investors. Consumers, too, might think that the economy’s slowing down. But Goldman Sachs’ chief equity strategist thinks such negative sentiment gives rise to a ‘buying opportunity’...” – CNBC PRO
-“Investors are finally feeling a little bit more confident that perhaps we priced in enough bad news and that’s really manifesting in a stronger market today (Monday).” - Art Hogan, chief market strategist at B. Riley Financial.
-“Correction since July hasn’t run its course.” -  Ari Wald, head of technical analysis at Oppenheimer
 
CHICAGO PMI
The latest Chicago Purchasing Manager's Index (Chicago Business Barometer) inched down to 44.0 in October from 44.1 in September. The latest reading is worse than the 45.0 forecast and marks the 14th straight month in contraction territory.” Commentary at...
https://www.advisorperspectives.com/dshort/updates/2023/10/31/chicago-pmi-practically-unchanged-in-october
 
EMPLOYMENT COST INDEX (NY Times)
“A measure of pay and benefits that officials at the Federal Reserve have been watching closely as they try to gauge the heat of the labor market grew at a moderate pace over the summer. The Employment Cost Index, a quarterly measure from the Labor Department that tracks changes in wages and benefits, climbed 1.1 percent in the third quarter of 2023 versus the prior three months. That was slightly faster than the 1 percent that economists expected and up from the previous 1 percent reading.”  Story at...
https://www.nytimes.com/2023/10/31/business/economy/wage-growth-inflation-federal-reserve.html
 
CONSUMER CONFIDENCE (Conference Board via prnewswire)
"Consumer confidence fell again in October 2023, marking three consecutive months of decline," said Dana Peterson, Chief Economist at The Conference Board. "October's retreat reflected pullbacks in both the Present Situation and Expectations Index. Write-in responses showed that consumers continued to be preoccupied with rising prices in general, and for grocery and gasoline prices in particular. Consumers also expressed concerns about the political situation and higher interest rates. Worries around war/conflicts also rose, amid the recent turmoil in the Middle East. The decline in consumer confidence was evident across householders aged 35 and up, and not limited to any one income group." Press release at...
https://www.prnewswire.com/news-releases/us-consumer-confidence-fell-again-in-october-301972824.html
 
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 rose about 0.7% to 4194.
-VIX fell about 8% to 18.14.
-The yield on the 10-year Treasury rose to 4.926%.
 
PULLBACK DATA:
-Drop from Top: 13.1%. 25.4% max (on a closing basis).
-Trading Days since Top: 458-days.
The S&P 500 is 1.8% BELOW its 200-dMA and 4.4% BELOW its 50-dMA.
*I won’t call the correction over until the S&P 500 makes a new-high; however, evidence suggests the major bear-market 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 2022 lows).
XLY - Consumer Discretionary ETF. (Holding since the October 2022 lows - I bought more XLY Monday, 8/21.)
I took profits and then reestablished positions as follows:
SPY – I bought a large position in the S&P 500 Friday, 8/14, in my 401k (it has limited choices).
XLE – Added Tuesday, 8/22.
SSO – 2x S&P 500 ETF. Added 8/24.
CSCO – added 9/5.
 
TODAY’S COMMENT:
VIX came down a lot today and my VIX indicator was close to issuing a buy, although it didn’t quite get there. The Options Players appear to be betting the correction is over. Today’s action looked like “correction over,” but without more signals, I can’t make that call. I’d like to see New-high/New-Low data improve and improvement in Breadth. Still, I feel a lot more bullish today than I have for the last several weeks.  
 
To break the correction, we need to see the S&P 500 break above its downward sloping, upper trend-line around 4325.
 
The daily spread of 20 Indicators (Bulls minus Bears) declined from -7 to -8 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations declined from -65 to -82. (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 SELL: PRICE was bullish; VOLUME & VIX are bearish; & SENTIMENT is neutral. I may be following this indicator; but not yet. I am still watching price action around the 200-dMA. It appears that the S&P 500 is close to a bottom and may have bottomed Friday.
 
(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
We could still see more selling before this downturn winds down, but my guess is that a bottom is near and we may have seen the bottom Friday. Still, I’m over invested.  4100 is my line in the sand and a drop below it will force me to sell some stocks.
 
ETF - MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs (Ranked Daily)
ETF ranking follows:
Momentum charts are not good since all of the ETFs are below their 120-dMA.  Ranking follows:
1)    XLE
2)    ITA
3)    XLK
 
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
 
TUESDAY 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.
 

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

 
“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
“Since 1929 there have been typically been an average of 1.1 or more declines of 10% each year. The last 10% decline happened on 8/16/2022. Statistically a 10% decline was due. Note that there is a 46% chance that a 10% decline extends into a 15% decline.” – Dan Hagan Asset Management.
 
“How you do anything is how you do everything.” - Basketball Hall of Famer Dirk Nowitzki as told by Mark Cuban told GQ last month:
 
"The reason why the spare tire isn't included on our new electric vehicles is actually a safety concern. The problem is if the vehicle is in an accident, the spare tire can cause damage to the electric battery which could cause a failure in the battery." – Honda explaining why they don’t offer a spare in their EVs.
 
BUDGET DEFICIT DOUBLED IN ONE YEAR UNDER BIDEN (Washington Examiner)
“...Treasury Secretary Janet Yellen said the federal government ran a $1.7 trillion deficit for fiscal 2023, which ended Sept. 30. That's up from a $1.4 trillion federal budget deficit posted in 2022... Yellen's math ignores another $300 billion in debt incurred by President Joe Biden's student debt cancellations, bringing the actual total of the deficit under the president to a full $2 trillion. Fix that adjustment for fiscal 2022, and that year's deficit amounted to a little less than $1 trillion. This means that in just one year, sans recession and sans war, the federal government under Biden managed to double the deficit by more than $1 trillion.” Story at...
How the federal budget deficit doubled under Biden in a single year (msn.com)
 
THE CASE FOR WIND POWER WAS BASED ON LIES (The Telegraph – News from Great Britain)
“Wind is already the cheapest form of power and will save us a fortune in future. We know this because the green energy lobby keeps telling us so. But it is hard to square with the words of Tom Glover, chair of energy company RWE’s UK arm, last week. No more offshore wind farms will be built, he said, unless the Government hikes the guaranteed long-term prices offered to their operators by as much as 70 per cent. The energy “market” is not really much of a market at all, not when it comes to green energy. The Government underwrites wind and solar through “contracts for difference” – guaranteeing operators a minimum “strike price”, rising with inflation, for every megawatt-hour of electricity they generate over 15 years... Last time the Government held an auction for the right to build offshore wind farms, in September, it received not a single bid... If we are going to have a grid based on intermittent renewables, it is no use looking just at the cost of generation. We have to add on the cost of energy storage, or some other kind of back-up – or else build so many wind and solar farms that we have just enough power at the worst of times, and a super-abundance of it at other times.
All are likely to be horrendously expensive.” Story at... 
The case for wind power was built upon a falsehood (msn.com) 
My cmt: We can be sure that the US has its own system of subsidies for wind and solar.
 
McCLELLAN OSCILLATOR - BULLISH DIVERGENCE (McClellan Financial Publicatons)
“Two weeks ago, I wrote here about the McClellan Oscillator leaving a "simple" structure above zero, which said that the bulls were not (yet) in charge.  The major averages since then have pushed to a lower low, even as seasonality says that the uptrend is supposed to be starting again now.  But as prices have made lower lows, the NYSE's McClellan A-D Oscillator is making a bullish divergence, which says that the energy is going out of the decline... One problem with a divergence, either a bullish or a bearish one, is that it is only a "condition" and not a "signal"... Stock prices do not have to start turning upward just because of a bullish divergence in the McClellan Oscillator.  But it sure helps.” – Tom McClellan. Commentary at...
https://www.mcoscillator.com/learning_center/weekly_chart/mcclellan_oscillator_bullish_divergence/
 
MARKET REPORT / ANALYSIS
-Monday the S&P 500 rose about 1.2% to 4167.
-VIX fell about 7% to 19.74.
-The yield on the 10-year Treasury rose to 4.888%.
 
PULLBACK DATA:
-Drop from Top: 13.1%. 25.4% max (on a closing basis).
-Trading Days since Top: 458-days.
The S&P 500 is 1.8% BELOW its 200-dMA and 4.4% BELOW its 50-dMA.
*I won’t call the correction over until the S&P 500 makes a new-high; however, evidence suggests the major bear-market 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 2022 lows).
XLY - Consumer Discretionary ETF. (Holding since the October 2022 lows - I bought more XLY Monday, 8/21.)
I took profits and then reestablished positions as follows:
SPY – I bought a large position in the S&P 500 Friday, 8/14, in my 401k (it has limited choices).
XLE – Added Tuesday, 8/22.
SSO – 2x S&P 500 ETF. Added 8/24.
CSCO – added 9/5.
 
TODAY’S COMMENT:
Last week had a few odd days where volumes were low, but Internals were poor; or Internals were good and volume was high. We wanted to see good internals on lower volume at a new low.  The markets didn’t get there, but it is possible that the improving internals were trying to tell us something. There were some bottom signs with both Bollinger Bands and RSI oversold. We also had Buying Pressure minus Selling Pressure trending higher in a bullish divergence.  As Tom McClellan pointed out in the commentary above, the McClellan Oscillator was/is also diverging to the bullish side.
 
Was Friday the low for this 10% pullback after a nearly 20% run up from the October 2022 low? Maybe, maybe not.  I suspect that if it isn’t the final low, it is very close to it. One thing we don’t want to see is a break of the 4100 level on the S&P 500.  That looks like a line in the sand. A break could lead to serious selling. I don’t expect that to happen, but then, I didn’t expect a 10% correction either.
 
The daily spread of 20 Indicators (Bulls minus Bears) improved from -9 to -5 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations declined from -55 to -63. (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 SELL: VOLUME & VIX are bearish; PRICE & SENTIMENT are neutral. I may be following this indicator soon; but not yet. I am still watching price action around the 200-dMA. It appears that the S&P 500 is close to a bottom and may have bottomed Friday.
 
(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
We could still see more selling before this downturn winds down, but my guess is that a bottom is near and we may have seen the bottom Friday. Still, I’m way over invested.  4100 is my line in the sand and a drop below it will force me to sell some stocks.
 
ETF - MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs (Ranked Daily)
ETF ranking follows:
Momentum charts are not good since all of the ETFs are below their 120-dMA.  Ranking follows:
1)    XLE
2)    XLK
3)    S&P500 - SPY
 
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

MONDAY 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 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.

PCE Prices ... Personal Spending, Personal Income ... Persoanl Saving ... Momentum Trading DOW Stocks & ETFs … Stock Market Analysis ...

 
“Supporting Ukraine degrades the Russian military, impedes Putin's expansionism, and is a deterrent to a Chinese invasion of Taiwan without putting American soldiers in harm's way.” - Michael Ramirez. Political commentary at...
https://michaelramirez.substack.com/p/michael-ramirez-essay-americas-new?r=ntzh3&utm_campaign=post&utm_medium=web
 
“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
PCE PRICES / PERSONAL INCOME / SPENDING  (Yahoo Finance)
“The Federal Reserve's preferred inflation metric showed prices continued to cool in September — a critical data point the Federal Reserve will consider as it weighs its next interest rate decision on Nov. 1. The Personal Consumption Expenditures (PCE) Index grew 3.4% year over year in September, in line with August's revised increase and meeting analyst expectations... Personal spending increased 0.7%, outweighing personal income, which rose 0.3%.” Story at...
https://finance.yahoo.com/news/feds-preferred-inflation-gauge-shows-further-signs-of-price-increases-cooling-135443531.html
 
WATCH HERE FOR A SELL SIGNAL (Markets Insider via msn.com)
“The S&P 500 is on the verge of a technical breakdown, but Fairlead Strategies' founder Katie Stockton says don't sell stocks just yet. That's because oversold extremes are flashing for certain indicators, suggesting that a rebound could be imminent...Stockton is closely watching the support range of 4,180 to 4,195 on the S&P 500. A decisive breakdown below 4,180, typically marked by two consecutive weekly closes below that level, would be the signal to Stockton that the current risk-off nature of the stock market is set to extend and drive stock prices even lower.” Story at...
The S&P 500 is on the verge of a technical breakdown. Here's the sell signal to watch for. (msn.com)
My cmt: We closed lower than 4180 this week, so we’ll need to see what happens by the end of next week
 
MARKET REPORT / ANALYSIS
-Friday the S&P 500 fell 0.5% to 4117.
-VIX rose about 3% to 21.27.
-The yield on the 10-year Treasury was nearly unchanged at 4.845%.
 
PULLBACK DATA:
-Drop from Top: 14.2%. 25.4% max (on a closing basis).
-Trading Days since Top: 457-days.
The S&P 500 is 2.9% BELOW its 200-dMA and 5.6% BELOW its 50-dMA.
*I won’t call the correction over until the S&P 500 makes a new-high; however, evidence suggests the major bear-market 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 2022 lows).
XLY - Consumer Discretionary ETF. (Holding since the October 2022 lows - I bought more XLY Monday, 8/21.)
I took profits and then reestablished positions as follows:
SPY – I bought a large position in the S&P 500 Friday, 8/14, in my 401k (it has limited choices).
XLE – Added Tuesday, 8/22.
SSO – 2x S&P 500 ETF. Added 8/24.
CSCO – added 9/5.
 
TODAY’S COMMENT:
Buying Pressure minus Selling Pressure has been trending higher since the 3 October low while the S&P 500 has been trending down.  This is the kind of bullish divergence that is suggesting that the recent downturn is nearly over. Both breadth and new-high, new-low data are in the zone where reversals have occurred in the past, but I have not yet seen any of those data points turn up.
 
Both Bollinger Bands and RSI signaled oversold today and that is a decent Bottom Signal, so perhaps we’ll see a reversal Monday or Tuesday. Usually, investors brood over the weekend after a down-period like we’ve seen recently and sell on Monday. This can lead to more seasoned investors starting to buy, creating turning-Tuesday.  Will we see it this time? We’ll see.
 
We look at a summary of indicators on Friday. (These indicators tend to be both long-term and short-term, so they are different than the 20 that I report on daily.) The weekly rundown of indicators remained to the Bear side this week, now 19-bear and 3-bull, but we did see some bottom indicators pop up.
 
BULL SIGNS
-Bollinger Bands – oversold.
-RSI – oversold.
-MACD of the percentage of issues advancing on the NYSE (breadth) made a bullish crossover 12 October.
 
NEUTRAL
-There have been 4 Distribution Days since the last Follow-thru day.
-There have been 4 Statistically-Significant days (big moves in price-volume) in the last 15-days.
-Sentiment.
-Bollinger Band Squeeze 28 April - expired.
-Overbought/Oversold Index (Advance/Decline Ratio).
-Issues advancing on the NYSE (Breadth) compared to the S&P 500.
-12 October there was a Bearish Outside Reversal Day. I’ll keep this in effect for 5 days and until the McClellan Oscillator turns bullish. - Expired
-There was a New-high/New-low spread reversal on 4 October (based on std deviation of spread). The spread doesn’t have to turn positive for this indicator to be bullish, it just has to improve a lot. - Expired
-The S&P 500 is 2.9% below its 200-dMA. (Bull indicator is 12% below the 200-day.)
-The short-term, 10-day EMA, Fosback Hi-Low Logic Index.
-The long-term, 50-dEMA, Fosback Hi-Low Logic Index.
-There were Hindenburg Omen signals 11 & 12 Sept 2023 – expired. The McClellan Oscillator turned positive.
-There have been 2 up-days over the last 10 sessions.
-There have been 8 up-days over the last 20 sessions.
-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 Calm-before-the-Storm/Panic Indicator flashed a top warning signal 15 Sept., but it may well have been a bottom signal. - Expired
-On average, the size of up-moves has been smaller than the size of down-moves over the -There was a 90% down-volume day 21 Sept.
-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.
last month, but not enough to send a signal.
-The Smart Money (late-day action).
 
BEAR SIGNS
-The smoothed advancing volume on the NYSE is falling.
-The 10-dMA percentage of issues advancing on the NYSE (Breadth) is below 50%.
-The 50-dMA percentage of issues advancing on the NYSE (Breadth) is below 50%
-The 100-dMA percentage of issues advancing on the NYSE (Breadth) is below 50%
-The 50-dMA percentage of issues advancing on the NYSE (Breadth) has been below 50%, for more than 3 days in a row.
-Smoothed Buying Pressure minus Selling Pressure.
-MACD of S&P 500 price made a bearish crossover 20 Oct.
-My Money Trend indicator is declining.
-Short-term new-high/new-low data.
-Long-term new-high/new-low data.
-Slope of the 40-dMA of New-highs is falling.
-The graph of the 100-day Count (the 100-day sum of up-days).
-McClellan Oscillator.
-VIX indicator.
-XLI-ETF (Cyclical Industrials) vs the S&P 500.
-The 5-10-20 Timer System is SELL.
-The 5-day EMA is below the 10-day EMA, so short-term momentum is bearish.
-34% 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 Utilities outpacing the Index.
 
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 19 bear-signs and 3-Bull. Last week, there were 18 bear-sign and 2 bull-signs.
 
Volume was down Friday (always a good sign in a downturn), but internals were poor so there was no buy signal.
 
The daily spread of 20 Indicators (Bulls minus Bears) remained -9 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations declined from -52 to -55. (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 SELL: VOLUME & VIX are bearish; PRICE & SENTIMENT are neutral. I may be following this indicator soon; but not yet. I am still watching price action around the 200-dMA. It appears that the S&P 500 is close to a 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
We could still see more selling before this downturn winds down, but my guess is that a bottom is near. Still, I’m way over invested.  If this downturn continues after Tuesday, I’ll cut some stock holdings in the leverage ETFs I own next week.
 
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 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.

GDP ... Jobless Claims ... Durable Orders ... Momentum Trading DOW Stocks & ETFs … Stock Market Analysis ...

 
“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
“The problem isn't that Johnny can't read. The problem isn't even that Johnny can't think. The problem is that Johnny doesn't know what thinking is; he confuses it with feeling.” ― Thomas Sowell, senior fellow at the Hoover Institution.
 
“Gross Domestic Product (GDP). GDP is simply the total amount of spending in an economy. GDP, as currently measured, does not distinguish between “good” spending and “bad” spending. GDP does not distinguish between consumption spending and investment spending. GDP also does not distinguish whether spending is generated by existing wealth, by going into debt temporarily, or by going into debt permanently. In this world, every dollar spent on education or new means of production, is counted the same as every dollar spent on epic bachelor parties and video games.” – Michael Lebowitz, Real Investment Advice
 
GDP – ADV (CNN)
“The US economy expanded at a remarkably strong pace in the third quarter, despite interest rates at their highest level in 22 years. Gross domestic product, a measure of all goods and services produced in the economy, grew at an annualized 4.9% rate in the third quarter...” Story at...
https://www.cnn.com/2023/10/26/economy/us-economy-third-quarter-gdp/index.html
My cmt: If this number stays high, the Fed may have to raise interest rates again.
 
JOBLESS CLAIMS (AP News)
“The number of Americans applying for jobless benefits rose last week but remains historically low as the labor market continues to show strength amid high interest rates and inflation. Jobless claim applications rose by 10,000 to 210,000 for the week ending Oct. 21...” Story at...
https://apnews.com/article/unemployment-benefits-jobless-claims-layoffs-labor-6cdfa448c23f42e0272fbe9ab1188a98
 
DURABLE ORDERS (RTT News)
“...new orders for U.S. manufactured durable goods spiked by much more than expected in the month of September. The report said durable goods orders shot up by 4.7 percent in September following a revised 0.1 percent dip in August.” Story at...
https://www.rttnews.com/3399778/u-s-durable-goods-orders-spike-in-september-as-aircraft-demand-soars.aspx
 
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 fell 1.2% to 4137.
-VIX rose about 2% to 20.68.
-The yield on the 10-year Treasury rose to 4.849%.
 
PULLBACK DATA:
-Drop from Top: 13.7%. 25.4% max (on a closing basis).
-Trading Days since Top: 456-days.
The S&P 500 is 2.4% BELOW its 200-dMA and 5.3% BELOW its 50-dMA.
*I won’t call the correction over until the S&P 500 makes a new-high; however, evidence suggests the major bear-market 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 2022 lows).
XLY - Consumer Discretionary ETF. (Holding since the October 2022 lows - I bought more XLY Monday, 8/21.)
I took profits and then reestablished positions as follows:
SPY – I bought a large position in the S&P 500 Friday, 8/14, in my 401k (it has limited choices).
XLE – Added Tuesday, 8/22.
SSO – 2x S&P 500 ETF. Added 8/24.
CSCO – added 9/5.
 
TODAY’S COMMENT:
Early in the day it looked like we would be able to call a bottom due to a successful retest of Wednesday’s low.  At today’s close, volume was too high to declare victory. Internals did improve, but with higher volume there is no buy signal.
 
Today was a another 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.  Bottoms almost always occur on or near Statistically-significant, down-days, but not all statistically-significant, down-days occur at bottoms. However, there were some bottom signs.
 
I track JNK bonds vs the S&P 500 although it isn’t in my system. Today, the 10-dMA of spread (JNK-Index) jumped higher suggesting a reversal is coming. Maybe, but I don’t have enough experience with this indicator to make a definitive conclusion.  
 
Bollinger Bands were oversold at the close and, at one point during the day, RSI was also oversold.  If they had both been oversold at the close, it would have been a good bottom indicator. Otherwise, it’s a confused message. RSI was within a whisker of oversold so perhaps that will be enough.
 
The daily spread of 20 Indicators (Bulls minus Bears) improved from -10 to -9 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations declined from -43 to -52. (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 SELL: VOLUME & VIX are bearish; PRICE & SENTIMENT are neutral. I may be following this indicator soon; but not yet. I am still watching price action around the 200-dMA. It appears that the S&P 500 is close to a 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
We could still see another week or more of selling before this downturn winds down, but my guess is that a bottom is near. Still, I’m way over invested.  If this downturn continues, I’ll cut some stock holdings in the leverage ETFs I own.
 
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.
 

A Bottom?

As of 11 AM, the numbers are looking good. Volume is down, compared to yesterday’s low, and market internals are markedly improved.  If those are true at the close, it strongly suggests a bottom today, or very soon. 

 On the other hand, internals look so good that the S&P 500 might reverse higher and close in positive territory Thursday.  If so, that would leave me without a retest of the low and less confidence that the bottom is in.

Either way, unless there is a change in the numbers as the day goes forward, and that could always happen, I don’t plan to make a change to investments.

Home Sales ... Crude Inventories ... Momentum Trading DOW Stocks & ETFs … Stock Market Analysis ...

 
“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
“It was Thomas Edison who brought us electricity, not the Sierra Club. It was the Wright brothers who got us off the ground, not the Federal Aviation Administration. It was Henry Ford who ended the isolation of millions of Americans by making the automobile affordable, not Ralph Nader. Those who have helped the poor the most have not been those who have gone around loudly expressing 'compassion' for the poor, but those who found ways to make industry more productive and distribution more efficient, so that the poor of today can afford things that the affluent of yesterday could only dream about.” ― Thomas Sowell, senior fellow at the Hoover Institution.

Chart from EIA at...
https://www.eia.gov/outlooks/aeo/pdf/AEO2023_Release_Presentation.pdf
 
NEW HOME SALES (Yahoo Finance)
“Sales of new U.S. single-family homes surged to a 19-month high in September as the annual median house price dropped by the most since 2009 amid discounts offered by builders to woo buyers, but mortgage rates flirting with 8% could curb demand.”Story at...
https://finance.yahoo.com/news/wrapup-1-us-home-sales-161416719.html
 
EIA CRUDE INVENTORIES (EIA)
“U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 1.4 million barrels from the previous week. At 421.1 million barrels, U.S. crude oil inventories are about 5% below the five year average for this time of year.” Report at...
https://ir.eia.gov/wpsr/wpsrsummary.pdf
 
GROPING FOR A BOTTOM (Heritage Capital)
“The S&P 500 fell below 4200 on Monday and into the next range for a potential bottom. Like we saw a few weeks ago, price has met at least the minimum downside target. The key now is for there to be confirmation which is supposed to come this week. One of the items that continues to not line up for the low that launches the rally into January is that the Volatility Index (VIX) seems to just be rallying and isn’t spiking like we usually see at solid bottoms. Mind you, it doesn’t have to do, but it’s something I like to see. Maybe it comes today or tomorrow or not at all. We will see.” _ Paul Schatz, President Heritage Capital. Commentary at...
https://investfortomorrow.com/blog/groping-for-a-low-again/
 
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 fell 1.4% to 4187.
-VIX rose about 6% to 20.19.
-The yield on the 10-year Treasury rose to 4.961%.
 
PULLBACK DATA:
-Drop from Top: 12.7%. 25.4% max (on a closing basis).
-Trading Days since Top: 455-days.
The S&P 500 is 1.2% BELOW its 200-dMA and 4.2% BELOW its 50-dMA.
*I won’t call the correction over until the S&P 500 makes a new-high; however, evidence suggests the major bear-market 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 2022 lows).
XLY - Consumer Discretionary ETF. (Holding since the October 2022 lows - I bought more XLY Monday, 8/21.)
I took profits and then reestablished positions as follows:
SPY – I bought a large position in the S&P 500 Friday, 8/14, in my 401k (it has limited choices).
XLE – Added Tuesday, 8/22.
SSO – 2x S&P 500 ETF. Added 8/24.
CSCO – added 9/5.
 
TODAY’S COMMENT:
8 out of the last 10-days have been down for the S&P 500.  9 out of 10 would be a buy signal for this indicator, though we’d need to see more bullish indicators before the system would give a buy signal overall. It will take at least 3 more down days before the Index sees 9 out of 10 down days.
 
Today 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.  Bottoms almost always occur on or near Statistically-significant, down-days, but not all statistically-significant, down-days occur at bottoms.
 
Wednesday looked like panic selling, so we can always ask, was it a sign of a bottom? It doesn’t look like it. The S&P 500 made a new low, but internals were worse and there weren’t any other bottom signs.
 
Utilities (XLU-ETF) are now outperforming the S&P 500. That was one of the 2 remaining bullish indicators from the Friday summary of indicators. 
 
Another bear sign: The S&P 500 broke back below its 200-dMA.
 
The daily spread of 20 Indicators (Bulls minus Bears) improved from -11 to -10 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations declined from -26 to -43. (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 SELL: VOLUME & VIX are bearish; PRICE & SENTIMENT are neutral. I may be following this indicator soon; but not yet. I am still watching price action around the 200-dMA.
 
(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
Until today, this pullback had been orderly. Now it looks like there is some real fear in the markets. I am guessing that we may see another week or more of selling before this downturn winds down.
 
Assuming that tomorrow is another down day, I’ll sell leveraged positions and maybe take profits (where I have them) to cut stock holdings back to more reasonable levels. This could turn out to be selling at the exact wrong time, so I’ll be prepared to repurchase stocks later if I can spot a bottom...or not sell at all if market internals look better Thursday.
 
I’ll probably wait till later in the day before I take any actions. I’ll post when I take action or if I learn anything new.
 
 
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
 
WEDNESDAY 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.