Jobless Claims ... Housing ... Philadelphia FED Index ... Momentum Trading DOW Stocks & ETFs … Stock Market Analysis ...

 
“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
JOBLESS CLAIMS (CNBC)
“The labor market continued to show surprising resiliency in the early days of 2024, with initial jobless claims posting an unexpected drop last week. Initial filings for unemployment insurance totaled 187,000 for the week ended Jan. 13, the lowest level since Sept. 24, 2022..." Story at...
https://www.cnbc.com/2024/01/18/weekly-jobless-claims-post-lowest-reading-since-september-2022.html
 
HOUSING STARTS / PERMITS (Fox Business)
“Housing starts decreased 4.3% last month to an annual rate of 1.46 million units... However, applications to build – which measures future construction – rose in December, increasing 1.9% ...When compared with the same time last year, building permits are up about 6.1%.” Story at...
https://www.foxbusiness.com/economy/housing-starts-fall-december-despite-sharp-drop-mortgage-rates
 
PHILADELPHIA FED INDEX (Advisor Perspectives)
“The latest Philadelphia Fed manufacturing index inched up this month but remained in negative territory, marking the 5th straight month of contraction and continuing to indicate overall decline. In January, the index rose to -10.6 from -12.8 in December, coming in below the forecast of -7.0.” Story at...
https://www.advisorperspectives.com/dshort/updates/2024/01/18/philly-fed-manufacturing-index-declined-january-2024
 
“...under an Energy Department rule, carmakers can arbitrarily multiply the efficiency of electric cars by 6.67. This means that although a 2022 Tesla Model Y tests at the equivalent of about 65 miles per gallon in a laboratory (roughly the same as a hybrid), it is counted as having an absurdly high compliance value of 430 mpg. That number has no basis in reality or law. For exaggerating electric-car efficiency, the government rewards carmakers with compliance credits they can trade for cash. Economists estimate these credits could be worth billions: a vast cross-subsidy invented by bureaucrats and paid for by every person who buys a new gasoline-powered car.” Commentary at...
https://www.wsj.com/articles/the-electric-car-cheating-scandal-subsidy-rule-efficiency-falsehood-2798b4ab
My cmt: The rule is due to be changed after complaints over its illeagality.
 
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 rose about 0.9% to 4781.
-VIX slipped about 4% to 14.13.
-The yield on the 10-year Treasury rose to 4.142
 
PULLBACK DATA:
-Drop from Top: 0.3%. 25.4% max (on a closing basis).
-Trading Days since All-Time Top: 512-days. (The top was 3 January 2022.)
The S&P 500 is 8.7% ABOVE its 200-dMA and 3.3% ABOVE its 50-dMA.
*I won’t call the correction over until the S&P 500 makes a new all-time-high; however, 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 – SOLD 1/17/2023. I’ll probably replace it with IBB (Biotech ETF) when it looks like this pullback is over. 
INTC – Added 12/6/2023.
 
BA – Added 12/6/2023. I plan to hold Boeing for the time being. Could it get any worse for them?
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:
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. Pullbacks end on down-days and usually big down-days at that. I still suspect that stocks will fall a little farther.  Could the bottom be in? Sure, but so far I haven’t seen too many bullish clues.
 
The daily spread of 20 Indicators (Bulls minus Bears) improved from -12 to -10 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations declined from -53 to -59. (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, VIX, 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
No change here: I don’t try to time the market for small, short-term pullbacks so I remain bullish. Indicators are not overly bearish so I expect a routine pullback to the lower trend-line. A decline of about 2-3% from Wednesday’s close would be perfectly normal. That opinion would change if indicators deteriorate.
 
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 remained 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 60% 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 sooner rather than later.  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.