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.