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 “Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
US weather warning: Tropical storm Tammy to smash Florida and Eastern US states (GB News)

US weather warning: Tropical storm Tammy to smash Florida and Eastern US states (msn.com)

 
Microsoft complains about phony news on Facebook and Twitter, but they don’t police their own site to prevent click bait garbage like the article above. What crap! Here are the model forecasts.  There is near zero threat to Florida or the East Coast. 
 

“There can have been few more weirdly humorous spectacles this week than the protests of gay-rights groups expressing solidarity with Hamas, under whose jurisdiction homosexual activity can get you executed. Israel is the only country in the Middle East that tolerates sexual nonconformity.” – Gereard Baker, Editor at Large, WSJ.
 
“According to another report by CNN, the Supreme Court shut down attempts to disqualify the former President from participating in the upcoming 2024 Elections.” From...
Supreme Court Declines Donald Trump's Disqualification from the 2024 Presidential Election (msn.com)
My cmt: As noted previously, the Court didn’t hear the case; they just sided with an earlier ruling that the man who brought the action didn’t have “standing.” This issue is likely to resurface and eventually will probably be decided by the Supreme Court.
 
FORD FACES $1B FINE UNDER NHTSA (msn.com)
“Ford Motor Co. would face for the first time $1 billion in fines from 2027 to 2032 under stricter proposed average fuel economy rules that target SUV and truck manufacturers, according to a filing the Dearborn-based manufacturer has made with the federal government.  The US National Highway Traffic Safety Administration has proposed a fleetwide average mandate, known as the Corporate Average Fuel Economy standard, of about 58 miles (93 kilometers) per gallon by 2032. The more stringent rules are part of a Biden administration effort to cut emissions and accelerate the country’s transition to electric vehicles.” Story at...
Ford Says It Faces $1 Billion in Fines Under Stricter Fuel Rules (msn.com)
My cmt: The comment period for this proposed rule closed on 16 October. It forces electric vehicles on an unsuspecting public - too much, too soon.
 
FED BEIGE BOOK (FED)
“Most Districts indicated little to no change in economic activity since the September report. Consumer spending was mixed, especially among general retailers and auto dealers, due to differences in prices and product offerings. Tourism activity continued to improve, although some Districts reported slight slowing in consumer travel, and a few Districts noted an uptick in business travel. Banking contacts reported slight to modest declines in loan demand. Consumer credit quality was generally described as stable or healthy, with delinquency rates still historically low but slightly increasing. Real estate conditions were little changed and the inventory of homes for sale remained low. Manufacturing activity was mixed, although contacts across multiple Districts noted an improving outlook for the sector. The near-term outlook for the economy was generally described as stable or having slightly weaker growth. Expectations of firms for which the holiday shopping season is an important driver of sales were mixed.” Report at...
https://www.federalreserve.gov/monetarypolicy/beigebook202310.htm
 
HOUSING STARTS (Fox Business)
“New U.S. home construction rebounded in September after a steep drop the previous month, even as the housing market continues to confront high mortgage rates. Housing starts rose 7% last month to an annual rate of 1.35 million units...” Story at...
https://www.foxbusiness.com/economy/housing-starts-rebound-september-spike-mortgage-rates
 
EIA CRUDE INVENTORIES (EIA)
“U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 4.5 million barrels from the previous week. At 419.7 million barrels, U.S. crude oil inventories are about 5% below the five year average for this time of year.” Story at...
https://ir.eia.gov/wpsr/wpsrsummary.pdf
 
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 fell 1.3% to 4315.
-VIX rose about 9% to 19.46.
-The yield on the 10-year Treasury rose to 4.908%.
 
PULLBACK DATA:
-Drop from Top: 10%. 25.4% max (on a closing basis).
-Trading Days since Top: 450-days.
The S&P 500 is 2% ABOVE its 200-dMA and 1.8% 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 be my choice, but it has been under pressure due to restrictions on chip sales to China.
 
TODAY’S COMMENT:
New-high/new-low data improved by 4.3 standard deviations on 9 October. That’s a good buy signal and reinforced the impression that the bottom of this 8% correction was 3 October. On 10 October New-highs outpaced new-lows and that looked like an all clear. Since then, new-lows have again outpaced new-highs. While that isn’t a huge negative in my system, I’d sure like to see the spread turn positive again.
 
Wednesday 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.  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 lower today than we saw at the prior lows on 3 & 4 October. That suggests selling pressure is easing. Checking the Selling-Pressure minus Buying -Pressure indicator confirms that it is trending up in a bullish direction. My Money Trend indicator is also trending up and it uses a similar type analysis. None of this means that the markets won’t continue to fall, but I think they do suggest that markets are likely to be near a turn-around upward. We may have to wait out more earnings reports before that bounce takes place.
 
It looks like the correction is over, but we’re still waiting to see if the Index can break above its 50-dMA. The Geo-Political situation is a worry and we need to keep watch on the markets to gauge their reaction.
 
The daily spread of 20 Indicators (Bulls minus Bears) declined from +9 to +2 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations improved from +10 to +18. (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 declined to HOLD: VOLUME, PRICE, SENTIMENT & VIX are neutral. The New-high/new-low reversal signal has expired.
 
(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. There are indications that the bottom was Wednesday at 4230 on the S&P 500 and I think we got confirmation on 9 & 10 October.
 
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 BUY. (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.