Housing Starts ... Permits ... Momentum Trading DOW Stocks & ETFs … Stock Market Analysis ...

“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
CHRISTMAS QUIZ:  According to a carol, how many ships come sailing in on Christmas Day?
 
“As temperatures go up, we’re likely to see more people die from heat. That’s absolutely true. You hear this all the time. But what is underreported is the fact that nine times as many people die from cold. ... As temperatures go up, you’re going to see fewer people die from cold. Over the last 20 years, because of temperature rises, we have seen about 116,000 more people die from heat. But 283,000 fewer people die from cold... Only reporting on the minuses, and only emphasizing worst-case outcomes, is not a good way to inform people.” - Bjorn Lomborg, President, Copenhagen Consensus Center. Former director of the Environmental Assessment Institute in Copenhagen.
 
“You might have been shocked to see American college students demonstrate in support of Hamas. But we should be careful not to overreact and expect the U.S. to degenerate into such hatred... Many people assume that the ideology of the young is a predictor of the future. But students grow up. They start out as pacifists until they realize that other people want to kill them. They start out as socialists until they realize that socialism brings economic ruin. In the real world, they learn through experience and exposure to other viewpoints that many policies that sound nice lead to terrible consequences.” – Dr. Michael Segal. He is a neurologist and neuroscientist. From WSJ Opinion pages.
 
HOUSING STARTS / PERMITS (Yahoo Finance)
“US new-home construction unexpectedly surged in November to a six-month high, benefiting from a dearth of existing houses on the market and suggesting the crunch in residential real estate is easing. Residential starts increased 14.8% last month...” Story at...
https://finance.yahoo.com/news/us-housing-starts-unexpectedly-rise-135013183.html
 
MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 rose about 0.6% to 4768.
-VIX dipped about 0.2% to 12.53.
-The yield on the 10-year Treasury dipped slightly to 3.931%.
 
PULLBACK DATA:
-Drop from Top: 0.6%. 25.4% max (on a closing basis).
-Trading Days since All-Time Top: 493-days. (The top was 3 January 2022.)
The S&P 500 is 10.3% ABOVE its 200-dMA and 7.3% 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:
Again, both RSI and Bollinger Bands remain overbought along with a couple of other overbought indications. When both Bollinger Bands and RSI are overbought, there is usually a retreat of some kind.  We might be looking at a 3-5% pullback, but there is nothing to say that this rally can’t continue longer.  Markets can stay overbought for longer than one might imagine
 
Bollinger Bands signal 2 standard deviations above the average. Statistically, that is a level that is exceeded only 5% of the time. It is showing that the Index is stretched higher than normal.
 
RSI, Relative Strength Index, measures the size of up-moves vs. all-moves on a 14-day moving average basis and presents the result as a percentile. For example; if the RSI is 85, it means that the size of up-moves is in the 85th percentile when compared to all moves over the 14-day period.  If ALL moves had been up, RSI would be 100 – a definite short term sell indicator. For my purposes, 30 is oversold (suggesting a turn-around to the upside) and 80 is overbought. If the up-moves and down-moves are equal in size over the 14-day period, RSI would be 50. Today’s RSI is 85.
 
I predicted months ago that the S&P 500 would make a new high this year.  The Index is close, 0.6% to go. I might be right, yet.
 
The daily spread of 20 Indicators (Bulls minus Bears) improved from +5 to +11 (a positive number is bullish; negatives are bearish-14 is a very high number); the 10-day smoothed sum that smooths the daily fluctuations improved from +81 to +85. (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 BUY: PRICE, VOLUME & VIX are bullish; SENTIMENT is neutral.
 
(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
 
TUESDAY 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.
 
CHRISTMAS QUIZ: Ans. I saw three ships come sailing in, on Christmas day on Christmas day. I saw three ships come sailing in, on Christmas Day in the morning.