Palestinian Missile Hit the Gaza Hospital ... Jobless Claims ... Philadelphia Fed Index ... Hoe Sales ... Leading Economic Indicators ... Momentum Trading DOW Stocks & ETFs … Stock Market Analysis ...
“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
US EXPERTS SAY EVIDENCE SUGGESTS PALESTINIAN ROCKET HIT
GAZA HOSPITAL (WSJ)
“We have none of the indicators of an airstrike—none,”
said Michael Knights of the Washington Institute for Near East Policy, an
expert on military and security issues. The U.S. has collected “high
confidence” signals intelligence indicating that the blast at the hospital in
Gaza was caused by the militant group Palestinian Islamic Jihad, U.S. officials
said, buttressing Israel’s contention that it wasn’t responsible for the
blast... “At the moment, the preponderance of evidence does point to it being a
Hamas or PIJ rocket hitting the area,” said Blake Spendley, an open-source
intelligence analyst. He said videos and photos he has reviewed showing the
scene were more consistent with a death toll of about 50 rather than the 500
initially claimed by Hamas.” Story at...
https://www.wsj.com/world/middle-east/israel-tries-to-back-up-claims-it-didnt-attack-gaza-hospital-a8cc3405
My cmt: The article went on to describe a very “shallow
crater” in the parking lot of the hospital and only “limited shock-wave damage”
to the building. Three hospital workers were injured. The disappointing fact is
that the world’s news media reported Hamas’ version that Israel bombed the Hospital
leading to world wide riots. Casualties occurred because, apparently, there
were people sleeping outside, around the hospital.
“Drone attacks targeting American military personnel at
air bases in Iraq were thwarted on Wednesday...According to the AP, the Iran-backed
Islamic Resistance in Iraq went on to take credit for both attacks and warned
of more "operations" against the so-called "American
occupation" in a statement.” Story at...
US
Military Intercepts Foreign Drones Targeting American Troops: Report (msn.com)
My cmt: Was there a response or was Biden sleeping again?
My Army son-in-law left the US on his way to one of those airbases yesterday.
"Have you ever wondered why so many people fall for
conspiracy theories? [asked David Hundsness, who holds a BA in Psychology from
the University of California] ...In spite of all the evidence available, it's
just weird that so many people choose to go with 'alternative' facts about
COVID, vaccines, the 2020 election, the moon landing, and so on. And when you
think about it, it's even weirder that they make this choice knowing that
others are going to mock them and argue with them and call them stupid’ ...
there are four reasons why people believe conspiracies: Lack of information,
anxiety, following an in-group and ego.”
Psychology
educator breaks down four reasons why some people fall for conspiracy theories
(msn.com)
“If we assume that the October lows in the stock market
were significant, then each passing day without price coming back down is a
small drop in risk.” – Paul Schatz, President Heritage Capital.
JOBLESS CLAIMS (CNBC)
“Initial filings for unemployment benefits dipped last
week, indicating that the U.S. labor market remains tight and a potential
factor in persistent inflation. Weekly jobless claims totaled a seasonally
adjusted 198,000 for the period ended Oct. 14...” Story at...
https://www.cnbc.com/2023/10/19/us-weekly-jobless-claims-total-198000-less-than-expected.html
EXISTING HOME SALES (CNN)
“Home sales dropped in September to the lowest level
since the foreclosure crisis as surging interest rates and climbing home prices made buying a home unattainable for
a growing share of would-be buyers. Historically low inventory of homes for
sale continued to push prices up...” Story at...
https://www.cnn.com/2023/10/19/homes/existing-home-sales-september/index.html
PHILADELPHIA FED INDEX (Rtt News)
“Philadelphia-area manufacturing activity contracted at a
slower rate in the month of October, according to a report released by the
Federal Reserve Bank of Philadelphia on Thursday. The Philly Fed said its
diffusion index for current general activity climbed to a negative 9.0 in
October from a negative 13.5 in September, although a negative reading still
indicates contraction.” Story at...
https://www.rttnews.com/3397688/philly-fed-index-rises-but-remains-in-negative-territory-in-october.aspx
LEADING ECONOMIC INDICATORS Conference Board)
“The LEI for the US fell again in September, marking a
year and a half of consecutive monthly declines since April 2022," said Justyna
Zabinska-La Monica, Senior Manager, Business Cycle Indicators, at The
Conference Board. "In September, negative or flat contributions from
nine of the index's ten components more than offset fewer initial claims for
unemployment insurance. Although the six-month growth rate in the LEI is
somewhat less negative, and the recession signal did not sound, it still signals
risk of economic weakness ahead. So far, the US economy has shown considerable
resilience despite pressures from rising interest rates and high inflation.
Nonetheless, The Conference Board forecasts that this trend will not be
sustained for much longer, and a shallow recession is likely in the first half
of 2024." Press reease at...
https://www.prnewswire.com/news-releases/the-conference-board-leading-economic-index-lei-for-the-us-continues-to-fall-in-september-301962128.html
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 fell 0.9% to 4278.
-VIX rose about 11% to 21.40.
-The yield on the 10-year Treasury rose to 4.992%.
PULLBACK DATA:
-Drop from Top: 10.8%. 25.4% max (on a closing basis).
-Trading Days since Top: 451-days.
The S&P 500 is 1.1% ABOVE its 200-dMA and 2.6%
BELOW its 50-dMA.
*I won’t call the correction over until the S&P 500
makes a new-high; however, evidence suggests the 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.
I have considered selling CSCO because it is no longer
a momentum leader - but I am still holding it. INTC would probably have been my
choice, but it has been under pressure due to restrictions on chip sales to
China.
TODAY’S COMMENT:
The markets were happy until Fed Powell gave his talk at
the Economic Club of New York Luncheon. If you want to hear his speech, this
should do it:
https://www.federalreserve.gov/newsevents/speech/powell20231019a.htm
During his talk, 10-year bond yields rose to only a
whisker below the “magic” 5% level and around 5PM it rose slightly above 5%. I don’t know that there is anything special
about the 5% level, but the market seems to think that there is, and that is
all that counts.
Breadth declined today. The 10, 50 & 100-dMA’s of
stocks advancing on the NYSE all dipped below 50%, indicating that for those
time frames, most stocks have been down.
Today, the S&P 500 is at its lower trend line drawn
back to the October 2022 lows. That’s a level of support so we’ll have to watch
tomorrow.
Thursday was 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. As I said
yesterday, this may also be signaling a flush-out of remaining weak hands. If
that is true, it could signal a short-term bottom.
Volume was up today, about the same as we saw at the
prior lows on 3 & 4 October, so we can’t feel as good about today as we did
Wednesday. The good news: the Buying Pressure minus Selling Pressure indicator is
still bullishly trending up; my Money Trend indicator is also trending up and
it uses a similar type analysis.
I’ll chalk today’s down-day to Fed Powell’s suggestion
that interest rates might have to go higher.
I still think the markets are near a turn higher. Yeah, I
know, “Trade what you see, not what you think.” For now, I see enough bullish indicators
to stay fully invested, but that may not last. We’ll get a better view of the markets
when I check and publish Friday’s Summary Rundown of Indicators.
As a fun (?) non-scientific indicator, all the CNBC regular
pundits on the Fast Money show were bearish.
That’s often a bullish sign.
The daily spread of 20 Indicators (Bulls minus Bears) declined
from +2 to -7 (a positive number is bullish; negatives are bearish); the 10-day
smoothed sum that smooths the daily fluctuations declined from +18 to +15.
(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 was
HOLD: VIX is bearish; VOLUME, PRICE & SENTIMENT 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.)
It looks like we have already seen the bottom in this ongoing weakness.
There are indications that the bottom was Wednesday, 3 October 2023, at 4230 on the S&P 500
and I think we got confirmation on 9 & 10 October. It appears we have
seen the short-term low in October of 2023, but Mr. Market is keeping us worried.
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 declined to 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.
