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“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
  

 

JOBLESS CLAIMS (MarketWatch)
"The number of Americans who applied for unemployment benefits last week rose by 5,000 to a seven-week high of 217,000, suggesting some softening in a sturdy U.S. labor market.” Story at...
https://www.marketwatch.com/story/jobless-claims-climb-to-7-week-high-of-217-000-but-layoffs-still-quite-low-0e078397
 
PRODUCTIVITY (UPI)
“Labor costs took an unexpected dip in the third quarter of 2023, as productivity increased, according to data released Thursday.
Labor non-business productivity was up 4.7% in the third quarter of 2023, the biggest gain since 2020...” Story at...
https://www.upi.com/Top_News/US/2023/11/02/labor-costs-down-BLS/5961698937216/
 
FACTORY ORDERS (US News)
“New orders for U.S.-made goods increased more than expected in September, boosted by strong demand for computers and electronic products among others, but higher borrowing costs remain a challenge for manufacturing.
Factory orders jumped 2.8% after rising 1.0% in August...” Story at...
https://money.usnews.com/investing/news/articles/2023-11-02/us-factory-orders-surge-in-september
 
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 rose about 1.9% to 4317.78.
-VIX fell about 7% to 15.66.
-The yield on the 10-year Treasury declined to 4.661%.
 
PULLBACK DATA:
-Drop from Top: 10%. 25.4% max (on a closing basis).
-Trading Days since Top: 461-days.
The S&P 500 is 1.7% ABOVE its 200-dMA and 0.7% 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:
Great day today: The S&P 500 finished almost 2% above its 200-dMA; today was a Follow-thru day; MACD of price made a bullish crossover. There was a significant improvement in the Friday Summary of Indicators and I expect we will see that reinforced Friday when we do the Friday rundown.
 
Volume was up today – a nice sign that a lot of investors agree that the correction may be over.
 
Bonawyn Eison said on CNBC’s Fast Money that he was concerned that Real Estate and Financials led the market today. For the record, Energy led today and that’s good. It suggests no looming recession, although everyone seems to expect a recession in 2024. Further, the reason Real Estate and Financials had big days today has to do with the impression that the FED is done.  I don’t expect Real Estate and Financials to continue to lead so I am not worried about his comment, even though he is a smart fellow. My thought, “Don’t look a gift bull in the mouth!” How’s that for confusing metaphors?
 
I wouldn’t be surprised to see a down day tomorrow. The S&P 500 has seen 4 days straight-up and Thursday was a statistically significant up-day. That just means that the price-volume move exceeded my statistical parameters. Statistics show that a statistically-significant, up-day is followed by a down-day about 60% of the time. 
 
The daily spread of 20 Indicators (Bulls minus Bears) improved from +2 to +9 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations improved from -82 to -66. (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 HOLD: PRICE was bullish; VOLUME & VIX & 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.)
 
BOTTOM LINE
Repeating the previous note: It’s looking more like the bottom was Friday. There are still some resistance zones that must be penetrated to the upside. The S&P 500 needs to break above its upper trend line and the 50-dMA around 4350. Then we can say with confidence the correction is over.
 
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)    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
 
THURSDAY MARKET INTERNALS (NYSE DATA)

My basket of Market Internals improved to 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.