Chicago PMI ... Momentum Trading DOW Stocks & ETFs … Stock Market Analysis ...

 
CHRISTMAS QUIZ: In “Away in a Manger,” what sound do the cattle make? Answer at bottom of blog.
 
“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
CHICAGO PMI (Advisor Perspectives)
“The latest Chicago Purchasing Manager's Index (Chicago Business Barometer) plummeted to 46.9 in December from 55.8 in November, marking the largest monthly drop in over two years. The latest reading is worse than the 51.0 forecast and drops the index back into contraction territory.” Charts and analysis at...
https://www.advisorperspectives.com/dshort/updates/2023/12/29/chicago-pmi-plummets-in-december
 
STOCK MARKET PULLBACK EXPECTED IN EARLY 2024 (msn.com)
“...four reasons why he [Tom Lee] expects stocks to stage a pullback after January.
1. The market could be getting ahead of the Federal Reserve in terms of interest rate cuts...
2. AI timeline could be pushed out due to a 'systematic hack' by malevolent AI...
3. Equity markets need to consolidate the parabolic gains from late 2023...
4. A drawdown in February/March timeframe is consistent with election year seasonal returns." Story at...
Expect a stock market pullback in early 2024 for these 4 reasons, Fundstrat says (msn.com)
 
MARKET REPORT / ANALYSIS
-Friday the S&P 500 dipped about 0.3% to 4770.
-VIX dipped about 0.2% to 12.45. (It was 12.47 yesterday. I had a typo here.)
-The yield on the 10-year Treasury rose to 3.866%.
 
PULLBACK DATA:
-Drop from Top: 0.6%. 25.4% max (on a closing basis).
-Trading Days since All-Time Top: 500-days. (The top was 3 January 2022.)
The S&P 500 is 9.6% ABOVE its 200-dMA and 5.9% ABOVE 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 of the 25% decline 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 8/21/23.)
 
INTC – Added 12/6/2023.
BA – Added 12/6/2023.
 
DWCPF - Dow Jones U.S. Completion Total Stock Market Index. – Added 12/7/2023. This is a large position in my retirement account betting on Small Caps.
 
TODAY’S COMMENT:
I predicted months ago that the S&P 500 would make a new-all-time-high “this year.” It didn’t make it, although it got within 0.3% on 28 December - so much for predictions! “Stay on target...almost there.” – Davish Krail, Graven Dreis.
 
We look at a summary of indicators on Friday. (These indicators tend to be both long-term and short-term, so they are different than the 20 that I report on daily.) The weekly rundown of indicators slipped a little toward the bear side, but remained bullish this week: now 6-bear and 18-bull.
 
BULL SIGNS
-The 10-dMA percentage of issues advancing on the NYSE (Breadth) is above 50%.
-The 50-dMA percentage of issues advancing on the NYSE (Breadth) is above 50%.
-The 100-dMA percentage of issues advancing on the NYSE (Breadth) is above 50%
-MACD of the percentage of issues advancing on the NYSE (breadth) made a bullish crossover 12 October.
-Long-term new-high/new-low data.
-The short-term, 10-day EMA, Fosback Hi-Low Logic Index.
-Slope of the 40-dMA of New-highs is rising.
-The graph of the 100-day Count (the 100-day sum of up-days).
-McClellan Oscillator.
-On average, the size of up-moves has been larger than the size of down-moves over the last month.
-VIX indicator.
-There was a high up-volume day on 21 December canceling the High down-volume day on 20 December. In addition, there were back-to-back, high up-volume days (80%+) on the NYSE 13 & 14 Dec.
-XLI-ETF (Cyclical Industrials) vs the S&P 500. The 40-dMA of spread is headed up – call it bullish.
-S&P 500 spread vs. Utilities (XLU-ETF) is bullish.
-The 5-day EMA is above the 10-day EMA, so short-term momentum is bullish.
-The 5-10-20 Timer System is BUY.
-There was a Zweig Breadth Thrust 3 November. That’s a rare, very-bullish sign, that will remain bullish until the McClellan Oscillator turns negative.
-61% of the 15-ETFs that I track have been up over the last 10-days. (45-55% is neutral.)
 
NEUTRAL
-There have been 2 Distribution Days since the last Follow-thru Day.
 -There have been 2 Statistically-Significant days (big moves in price-volume) in the last 15-days.
-Bollinger Bands.
-Overbought/Oversold Index (Advance/Decline Ratio).
-Sentiment.
-Bollinger Band Squeeze 28 April - expired.
-The 50-dMA percentage of issues advancing on the NYSE (Breadth) has not been below 50%, for more than 3 days in a row.
-Smoothed Buying Pressure minus Selling Pressure.
-The long-term, 50-dEMA, Fosback Hi-Low Logic Index.
-There have been 14 up-days over the last 20 sessions.
-There have been 7 up-days over the last 10 sessions.
-RSI.
-The Calm-before-the-Storm/Panic Indicator flashed a top warning signal 15 Sept., but it may well have been a bottom signal. - Expired
-There was a New-high/New-low spread reversal on 4 October (based on std deviation of spread). - Expired
-The S&P 500 is 9.6% above its 200-dMA. (Bear indicator is 12% above the 200-day.)
-There were Hindenburg Omen signals 11 & 12 Sept 2023 – expired. The McClellan Oscillator turned positive.
-2.8% of all issues traded on the NYSE made new, 52-week highs when the S&P 500 made a new all-time-high, 3 January 2022. (There is no bullish signal for this indicator.) This indicated that the advance was too narrow and a correction was likely to be >10%. It proved correct, but is now Expired.
-20 December there was a Bearish Outside Reversal Day, but the S&P 500 closed above the high for 20 December, 4778, on 27 & 28 December so this one is now neutral.
 
BEAR SIGNS
-The smoothed advancing volume on the NYSE is falling.
-Issues advancing on the NYSE (Breadth) compared to the S&P 500.
-MACD of S&P 500 price made a bearish crossover 29 Dec.
-My Money Trend indicator.
-Short-term new-high/new-low data.
-The Smart Money (late-day action).
 
On Monday’s update of the Friday summary of indicators (20 December 2021), 9 days before the top of the current 25% correction, there were 21 bear-signs and zero bull-signs. Now there are 6 bear-signs and 18-Bull. Last week, there were 3 bear-sign and 21 bull-signs.
 
The daily spread of 20 Indicators (Bulls minus Bears) declined from +3 to +2 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations declined from +93 to +81. (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 improved to BUY: PRICE & VIX are bullish; VOLUME & SENTIMENT are neutral. (One warning: The Long-Term Indicator is not a good top-indicator. It can signal BUY at a top.)
 
(The important major BUY in this indicator was on 21 October 2022, 7-days after the bear-market 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
I remain bullish.
 
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
 
FRIDAY MARKET INTERNALS (NYSE DATA)

My basket of Market Internals remained HOLD. (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.)  THIS INDICATOR GET’S CONFUSED WHEN VOLUMES ARE CONSISTENTLY LOW, LIKE DURING THE HOLIDAYS.
 
...My current invested position is about 65% 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.
 
CHRISTMAS QUIZ: Ans. "‘Away in a Manger"’ is a Christmas carol first published in the late nineteenth century and used widely throughout the English-speaking world. In Britain, it is one of the most popular carols; a 1996 Gallup Poll ranked it joint second. Although it was long claimed to be the work of German religious reformer Martin Luther, the carol is now thought to be wholly American in origin.” – Wikipedia
 
“The cattle are lowing, the baby awakes,
But little Lord Jesus, no crying he makes.”
 
What does “lowing” of cattle mean?
“noun. the ordinary vocal sounds made by cattle. In the distance cattle moved about; neither their steps nor their lowing could be heard.” Collins English Dictionary. Copyright © HarperCollins Publishers.