... 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.
“Given the strength of Friday afternoon’s rally,
especially late in the day, the bulls should have more powder to use over the
coming week. We also have a tailwind as the new month begins. On top of all
that top, June-August are the strongest three months of the election year with
an incumbent running, although right now, I sense the summer peak will come
earlier.” – Paul Schatz, President Heritage capital at...
https://investfortomorrow.com/blog/may-certainly-ended-with-a-bang/
My cmt: One wonders whether the election year trend will
follow the script, especially since the incumbent is polling so poorly.
MARKET REPORT / ANALYSIS
-Monday the S&P 500 rose about 0.3% to 5361.
-VIX rose about 4% to 12.74.
-The yield on the 10-year Treasury rose to 4.449%.
MY TRADING POSITIONS:
UWM – Added 5/2/2024
QLD – Added 4/29/2024
SSO – Added 4/29/2024.
XLE – Added 4/24/2024
CRM – Added 1/22/2024.
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.
DWCPF - Dow Jones U.S. Completion Total Stock Market
Index. – Added 12/7/2023 when I sold the S&P 500.
“The Dow Jones U.S. Completion Total Stock Market Index,
also known as the DWCPF, is a widely used financial index that provides a
comprehensive measure of the US equity market. The DWCPF includes all US stocks
that are not included in the Dow Jones US Total Stock Market Index, which
comprises large-cap and mid-cap companies. As a result, the DWCPF provides a
complete picture of the US stock market, including small-cap and micro-cap
companies, which are often overlooked by other indexes.” From...
https://fi.money/blog/posts/what-is-dow-jones-u-s-completion-total-stock-market-index-dwcpf
CURRENT SUMMARY OF APPROXIMATELY 50 INDICATORS:
The Bull/Bear Spread (Bull Indicators minus Bear
Indicators) deteriorated, but remained on the bullish side (red line in the
chart below). Today, there were 11 Bear-signs and 14-Bull. (The rest are
neutral. It is normal to have a lot of neutral indicators since many of those
are top or bottom indicators that will signal only at extremes.) The 10-dMA of
spread (purple line in the chart below) is still moving higher, a bullish sign.
TODAY’S COMMENT:
There were only 67 new-highs Monday on a day when the
S&P 500 made a new all-time high.
That suggests a narrow advance. This indicator has presaged corrections
of 10% or greater. I haven’t been
worried about this narrow advance, because overall breadth had been pretty
good. That changed today.
The 10-dMA and 50-dMA of issues advancing on the NYSE
both dropped below 50% today, indicating that for the periods 2-weeks and
10-weeks, less than half of all issues on the NYSE have up. These stats just
reinforce the narrow advance.
Friday there was a Bearish Outside Reversal Day.
“Outside reversal is a price chart pattern in investing
that occurs when an asset’s high and low prices for the day exceed the high and
low prices of the previous day. It is also known as a bullish or bearish
engulfing pattern. It can indicate a change in market trend and provide a
trading signal to investors.” From...
https://due.com/terms/outside-reversal/
The S&P 500 is 11.6% above its 200-dMA. (The Bear
indicator is 12% above the 200-day.) The markets can get much higher than 12%
above the 200-day, but usually the 12% level can be a limiter for the S&P
500. Still, there was some good news today.
My VIX indicator turned bullish and there are still 14
bull-signs, so it is not time to panic. It does suggest that it may soon be
time to take profits in my leveraged positions and we need to pay attention.
LONG-TERM INDICATOR: The Long Term NTSM indicator turned
BUY: PRICE & VIX are bullish; VOLUME & SENTIMENT are neutral.
(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 switching to neutral and watching indicators closely.
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)
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 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.)
...My current invested
position is about 75% stocks, including stock mutual funds and ETFs. I’m
usually about 50% invested in stocks, so this is a bullish, over-invested
position. This is my max % for stock allocation.
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, usually by using an S&P 500 ETF as I did
back in October 2022 and 2023.
