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

 
“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.
 
“Far more money has been lost by investors in preparing for corrections, or anticipating corrections, than has been lost in the corrections themselves.” - Peter Lynch, former manager of Fidelity’s Magellan® fund.
 
“I absolutely hate everyone here that is doing this [trying to support Ukraine]. I mean, I seriously hate them for doing this to the American people and paying for the murder and slaughter of people in Ukraine. Vladimir Putin has not said that he wants to go march across Europe and take Europe.” – Marjorie Taylor Greene (R-GA),
 
“Once again Moscow Marge is busy deploying her Kremlin talking points. Is she a useful idiot or is she intentionally spreading Putin's lies? Either way it's pathetic and unAmerican.” – Liz Cheney, former Republican Congresswoman.
 
THE GREEN ENERGY PRICE SHOCK (WSJ)
“Do White House officials pay electric bills? They strangely keep saying the President’s climate agenda is reducing electric-power rates even as the cost of running your dishwasher is sky-rocketing, as illuminated by the Labor Department’s consumer-price index... Electric rates remained relatively flat in the seven years before President Biden took office, rising 5%. Thank cheap natural gas. Yet since January 2021 electricity prices have soared 29.4%—about 50% more than overall inflation... Federal regulations, renewable subsidies and state green-energy mandates are forcing fossil-fuel and nuclear plants to retire prematurely... By driving more baseload power plants out of business, IRA [The Inflation Reduction Act ] subsidies will increase electric bills even more.... The Inflation Reduction Act may be the biggest legislative misnomer of all time.” WSJ Editorial at... 
https://www.wsj.com/articles/electricity-prices-biden-green-energy-labor-department-2b4ea2cb
 
SEASONAL POSITIVE TAILWIND (Heritage Capital)
“Regarding the Middle East, I have two schools of thoughts. First, Iran’s retaliation on Israel was symbolic and not the start of anything big. Why send slow moving drones that they knew would be intercepted. They needed to save face among their people. The second thought is that the attack was just a test run to see who would defend Israel, with what weapons and to what extent. The real attack would be forthcoming... the most bullish scenario has stocks bottoming this week. That is still not my base case, but it remains a possibility. It would be easier if we saw a seasonal bounce for 1-3 days with another move lower into month-end. That would set up nicely for a better and more long-lasting rally.” Paul Schatz, President Heritage Capital. Commentary at...
https://investfortomorrow.com/blog/seasonally-positive-tailwind-against-middle-east-escalation/
 
MARKET REPORT / ANALYSIS
-Monday the S&P 500 fell about 1.2% to 5062.
-VIX rose about 11% to 19.23.
-The yield on the 10-year Treasury rose to 4.610%.
 
MY TRADING POSITIONS:
QLD- Sold 4/8/2024
UWM – Sold 4/8/2024.
INTC – Sold 4/8/2024.
 
XLK – Technology ETF (holding since the October 2022 lows). I don’t want to pay taxes on this gain, so I am holding this position.
CRM – Added 1/22/2024
Salesforce was down over 7% today. News follows: “Salesforce (CRM) is reportedly in advanced talks to acquire data management software company Informatica (INFA), according to a Wall Street Journal report. The potential acquisition would allow Salesforce to boost its data integration and management capabilities by tapping into Informatica's product suite.” – Yahoo Finance.
 
DWCPF - Dow Jones U.S. Completion Total Stock Market Index. – Added 12/7/2023 when I sold the S&P 500. This is a large position in my tax-deferred, retirement account betting on Smaller Caps. (This position captures smaller cap and micro-cap stocks that are not included in the Dow Jones US Total Stock Market Index .)
 
TODAY’S COMMENT:
 

Today’s chart was not pretty.  I thought when the futures were up in the morning it was a sign that the weakness was over.  That was not to be. It’s hard to say whether today was follow thru from last week, or simply a reaction to the news in the middle east.   With Iran’s attack on Israel, weak market action today is not a surprise. Either way, we’ll look at indicators.
 
Today’s market internals were not good and the spread for the Summary of 50-Indicators remained bearish.  There are now 18 bear-signs and 7-Bull. There are some bottoming signs.
 
Bollinger Bands are oversold and RSI is very close to an oversold signal. When they are both oversold it is usually a good buy signal – not there yet. The S&P 500 slipped about 1% below its 50-dMA.  There is support around 5000 so perhaps the Index will find its bottom with another 1% drop.
 
Today was another 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.  Bottoms often occur on statistically-significant, down-days, so today could be the end of the pullback. Unfortunately, all statistically-significant, down-days are not bottoms so we can’t be certain that weakness is over. 
 

CURRENT SUMMARY OF APPROXIMATELY 50 INDICATORS:
Today, there are 18 bear-signs and 7-Bull.
 
LONG-TERM INDICATOR: The Long Term NTSM indicator slipped to SELL: PRICE & SENTIMENT are neutral; VIX & VOLUME are bearish.
(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 am bullish longer-term, but still Neutral for now. I took profit in some positions last week. I may trim more, but that will depend on the indicators. If we see consecutive closes below the 50-dMA on the S&P 500, it will be a concern; but there are some positive signs showing up. Bollinger Bands are signaling buy and RSI is almost there.
 
The S&P 500 is 3.7% below its all-time high. My guess is that the markets will retreat a little farther until we see some bottom indications.
 
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

MONDAY 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 50% stocks, including stock mutual funds and ETFs. I’m usually about 50% invested in stocks, so this is a fully-invested position.
 
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.