ISM ... Factory Orders ... ADP Employment ... 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.
TRUMP’S NY FRAUD TRIAL (WSJ)
“Judge Arthur Engoron granted partial summary
judgment to the state last week, ruling that Mr. Trump presented grossly
inflated financial figures to lenders. ...’Defendants correctly assert
that ‘the record is devoid of any evidence of default, breach, late payment, or
any complaint of harm.’ The judge said, however, that legally speaking this is
“completely irrelevant.” Whether he is correct under New York law is a possible
subject of appeal.” – WSJ Opinion at...
https://www.wsj.com/articles/donald-trump-new-york-fraud-trial-arthur-engoron-letitia-james-49ef3200?mod=opinion_major_pos1
“The Supreme Court is
to decide a case that could completely change the balance of power between
courts and government and spell big trouble for environmentalism and other
progressive causes... Chevron [Chevron vs. Natural Resources Defense
Council] compels federal courts to defer to a federal agency's
interpretation of an ambiguous or unclear statute. That allows government
agencies to fill in the gaps in legislation without judicial interference. The
case is hated by many conservatives because it allows the Environmental
Protection Agency and other government entities to do their jobs without being
overruled by Republican-appointed judges.” From...
Supreme
Court Ruling Could See Environmental Protections Stripped Away (msn.com)
My cmt: I hate Chevron because it supports the
administrative state and allows Congress to write sloppy legislation that gives
unelected bureaucrats too much power. (I used to be one.) Interestingly,
Conservative former Supreme Court Justice Antonin Scalia was a big supporter of
the Chevron decision, although he was not on the court when it was decided.
“Kevin McCarthy chose the only option he had on
Saturday to avoid a pointless government shutdown by seeking a bipartisan
vote...Mr. Gaetz, Matt Rosendale, Andy Biggs, Ralph Norman, Dan
Bishop and pals have given no evidence that they understand the reality of
divided government. It requires House GOP unity to have any leverage against a
Democratic Senate and President, and even then there has to be compromise. The
rejectionists claim to be the only Republicans with principles, but their only
apparent strategy—and only seeming goal—is to blow everything up.” – WSJ
Editorial Board.
GOVERNMENT SHUTDOWN?
“We continue to view a shutdown in Q4 as the base case, likely
when funding expires Nov. 17. That said, while a leadership vacuum [in the House
of Representatives] raises the odds of a government shutdown, we still view a
prolonged shutdown (i.e., more than 2-3 weeks) as unlikely given the political
consequences of certain aspects of a shutdown, particularly a failure to pay
servicemembers, which occurs twice a month (the next pay date at risk is Dec.
1).” – Alec Phillips, Goldman Sachs.
ADP EMPLOYMENT CHANGE (ADP via prnewswire)
"Private sector employment increased by 89,000 jobs in
September and annual pay was up 5.9 percent year-over-year, according to the
September ADP® National
Employment ReportTM produced by the ADP Research Institute® in
collaboration with the Stanford Digital Economy Lab ("Stanford Lab").” Press release at...
https://www.prnewswire.com/news-releases/adp-national-employment-report-private-sector-employment-increased-by-89-000-jobs-in-september-annual-pay-was-up-5-9-301946974.html
FACTORY ORDERS (US
News)
“New orders for U.S.-made goods increased more than
expected in August and shipments accelerated, supporting views that economic
growth strengthened in the third quarter. Factory orders rebounded 1.2% after
falling 2.1% in July...” Story at...
https://money.usnews.com/investing/news/articles/2023-10-04/us-factory-orders-beat-expectations-in-august
ISM NON-MANUFACTURING INDEX (prnewswire)
“Economic activity in the services
sector expanded in August for the eighth consecutive month as the
Services PMI® registered 54.5 percent, say the nation's purchasing and
supply executives in the latest Services ISM® Report On Business®. The
sector has grown in 38 of the last 39 months, with the lone contraction in
December of last year.” Press release at...
https://www.prnewswire.com/news-releases/services-pmi-at-54-5-august-2023-services-ism-report-on-business-301918588.html
EIA CRUDE INVENTORIES (EIA)
“U.S. commercial crude oil inventories (excluding those
in the Strategic Petroleum Reserve) decreased by 2.2 million barrels from the
previous week. At 414.1 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
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 rose about 0.8% to 4264.
-VIX fell about 6% to 18.55.
-The yield on the 10-year Treasury fell to 4.733%.
PULLBACK DATA:
-Drop from Top: 11.1%. 25.4% max (on a closing basis).
-Trading Days since Top: 440-days.
The S&P 500 is 1.4% ABOVE its 200-dMA and 3.9%
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 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:
According to CNBC pundits, bond yields fell due to ADP
employment numbers (above) that were well below expectations- sounds
reasonable.
Today, there was a nearly 4 standard deviation improvement
in new-high/new-low spread. That’s a solid bullish signal. In addition, my New-high/New-low
percentages are in a zone that has previously occurred near bottoms. That’s a different indicator that looks at the
percentage of new-high vs new-lows on a moving average basis. If that indicator reverses, I think we can say
goodbye to this downturn.
When I look at performance since the July highs, I see that
the S&P 500 has fallen 7.1% as of today.
When the weakness started, I expected that the index would fall a bit less
than 5%. If I only missed the dip by 2% I am ok with that. Calling short-term
moves is a fools game anyway.
I am going to remain fully invested unless the Index
falls below the 200dMA; I’ll reevaluate if it does.
The daily spread of 20 Indicators (Bulls minus Bears) improved
from -10 to -6 (a positive number is bullish; negatives are bearish); the
10-day smoothed sum that smooths the daily fluctuations declined from -74
to -77. (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 & PRICE are bearish; SENTIMENT & VIX are neutral.
I’m not selling now. I’d prefer to hang on since I
am still expecting a relatively shallow pullback from August highs and if the
markets haven’t bottomed yet, they are not far from it.
(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 am still cautiously optimistic that the bottom of this
decline will be around the 200-dMA. There are indications that the bottom was
yesterday at 4230 on the S&P 500. I’ll be looking for more confirmation. If
I wasn’t already fully invested, I’d be adding to stock holdings.
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.
