Drones ... Fed Funds ... Housing ... Crude Inventories ... Momentum Trading DOW Stocks & ETFs … Stock Market Analysis

 
“What the welfare system and other kinds of governmental programs are doing is paying people to fail. Insofar as they fail, they receive the money; insofar as they succeed, even to a moderate extent, the money is taken away.” ― Thomas Sowell, senior fellow at the Hoover Institution.
 
“If politicians stopped meddling with things they don't understand, there would be a more drastic reduction in the size of government than anyone in either party advocates.”
― Thomas Sowell
 
“While there is little threat of any viable prosecution of figures like the members of the January 6th Committee, the use of “White Knight pardons” [preemptive pardons for political allies by Biden] offers obvious political benefits. After many liberals predicted the imminent collapse of democracy and that opponents would be rounded up in mass by the Trump Administration, they are now contemplating the nightmare that democracy might survive and that there will be no mass arrests. The next best thing to a convenient collapse of democracy is a claim that Biden’s series of preemptive pardons averted it.” Jonathan Turley, professor at George Washington University Law School. Commentary at...
https://jonathanturley.org/2024/12/17/the-danger-of-white-knight-pardons-biden-could-fundamentally-change-presidential-power/#more-226567
 
Worth repeating:
DRONE UPDATES – NO NATIONAL SECURITY RISK (ABC News)
“The thousands of drone sightings reported over the last month in Northeastern states don't appear to be "anything anomalous," nor do they present a national security or public safety risk, federal officials said in a multiagency statement late Monday.” Story at...
https://abcnews.go.com/US/east-coast-drones-latest-fbi-dod-statement/story?id=116855247
My cmt: Really? See below...
 
CHINESE NATIONAL CONVICTED IN ESPIONAGE CASE (WAVY.com)
“Fengyun Shi [Chinese “student”] was flying the unmanned aircraft [drone] outside the 65th Street and Huntington Avenue Entrance of HII Newport News Shipbuilding when it got stuck in a tree. The SD card showed footage captured of U.S. Navy vessels or vessels intended for use by the Navy, according to court documents. This violates the Espionage Act, which prohibits a person of taking pictures of companies that manufacture classified military equipment. Shi was sentenced to six months for both counts.” Story at...
https://www.wavy.com/news/local-news/chinese-national-sentenced-for-espionage-after-flying-drone-over-nn-navy-ships/
 
CHINESE NATIONAL ARRESTED FOR FLYING DRONE OVER VANDENBURG SFB (Santa Maria Times)
“A Brentwood man has been arrested and charged with federal offenses after allegedly flying a drone over Vandenberg Space Force Base and photographing the site, according to the U.S. Attorney's Office. Yinpiao Zhou, 39, a Chinese citizen, was taken into custody on Dec. 9 at San Francisco International Airport as he prepared to board a flight to China.” Story at... 
https://santamariatimes.com/news/local/govt-and-politics/chinese-national-arrested-at-sf-airport-after-flying-drone-over-vandenberg-sfb-investigation-continuing/article_2d8d7c38-bbe8-11ef-a615-c75fa361492f.amp.html
 
"Think of how stupid the average person is, and realize half of them are stupider than that."- George Carlin
 
FED FUNDS TARGET DECISION (Yahoo Finance)
“The Federal Reserve reduced interest rates by a quarter percentage point Wednesday and scaled back the number of cuts it expects to make next year. In a split vote, the central bank voted to reduce its benchmark interest rate by 25 basis points to a new range of 4.25%-4.5%, initiating its third consecutive rate cut of 2024 despite signs that inflation isn’t entirely going away.
https://finance.yahoo.com/news/fed-cuts-rates-by-quarter-point-scales-back-cuts-for-2025-125715874.html
 
HOUSING STARTS / BUILDING PERMITS (Yahoo Finance)
“Housing starts declined 1.8% month over month, reaching their lowest level since July. However, single-family housing starts showed resilience, rising 6.4% from the previous month. Building permits also demonstrated strength, climbing 6.1% month over month.” Story at...
https://finance.yahoo.com/video/homebuilder-stocks-react-nov-housing-152024411.html
 
CRUDE OIL INVENTORIES (EIA)
“U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 0.9 million barrels from the previous week. At 421.0 million barrels, U.S. crude oil inventories are about 6% below the five-year average for this time of year.” Story at...
https://ir.eia.gov/wpsr/wpsrsummary.pdf
 
MARKET REPORT / ANALYSIS AS OF 1PM FRIDAY
-Wednesday the S&P 500 fell about 3% to 5872.
-VIX was up about 44% to 22.84.
-The yield on the 10-year Treasury rose (compared to about this time, prior trading day) to 4.514%.
 
MY TRADING POSITIONS:
XLK – Holding since the October 2022 lows.  Added more 9/20.
 
SSO – sold 12/17. (IRA acct.)
SPY – sold 12/17. (IRA acct.)
QLD – sold 12/17. (IRA acct.)
UWM – sold 12/17. (IRA acct.)
 
CURRENT SUMMARY OF APPROXIMATELY 50 INDICATORS:
Today, of the 50-Indicators I track, 20 gave Bear-signs and 7 were Bullish. The rest are neutral. (It is normal to have a lot of neutral indicators since many of the indicators are top or bottom indicators that will signal only at extremes.)

The daily Bull/Bear, 50-Indicator spread (Bull Indicators minus Bear Indicators, red curve in the chart above) declined to -13 (13 more Bear indicators than Bull indicators).
 
TODAY’S COMMENT

The Fed decision came at 2pm and there isn’t much doubt what the markets thought about it. The number of expected rate cuts for next year dropped from 4 to 2. Interest rates will be higher for longer. 

Today’s Bull-Bear spread of -13 is bearish. The 10-dMA of the 50-Indicator Spread (purple line in the chart above) continued down today so that is a bearish signal. (I follow the 10-dMA for trading buy-signals and as an indicator for sell signals.)

 

Here are some of the important indicators:

-Wednesday was a 90% down-volume day. From Lowry Research: “A single, isolated 90% Downside Day does not, by itself, have any long-term trend implications, since they often occur at the end of short-term corrections. But, because they show that investors are in a mood to panic, even an isolated 90% Downside Day should be viewed as an important warning that more could follow.”
 
-The S&P 500 closed 0.8% below 50-dMA
 
-Overbought/Oversold ratio is oversold.
 
-The S&P 500 has been down 7-days over the last 10.  This is a neutral position.
 
-The “Calm-Before-the-Storm” indicator flashed a warning Monday to expect a correction within the next 20-days. That warning that Markets have been too calm recently was validated today.  The indicator became a “Panic Warning” today.  The issue is this: Panic can happen at a Top or a Bottom. Since the S&P 500 is close to its 50-dMA, I’ll put a positive spin on the indicator for the moment.
 
-Wednesday was a 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 almost always occur on or near Statistically-significant, down-days, but not all statistically-significant, down-days occur at bottoms. Today could be a bottom, but there was only one Bottom indicator (Bolinger Bands) not enough to send a strong bottom-signal.
 
The Drop from the all-time high is 3.6%.
 
If declines do continue, here are some support levels where declines may end,:
100-dMA – S&P 500, 5743
October lows: S&P 500, 5700
200-dMA: about S&P 500, 5520
 
I don’t see enough bottom signals to call an end to the weakness.  We’ll have to wait for more signs.
 
BOTTOM LINE
Near term, I’m neutral / bearish till we get more data. We could still see a Santa rally.  Markets often overreact when the Fed speaks.
 
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
 
WEDNESDAY MARKET INTERNALS (NYSE DATA)

My basket of Market Internals remained SELL. (My basket of Market Internals is a decent trend-following analysis that is most useful when it diverges from the Index.) 
 
 
 

...My current invested position is about 50% stocks, including stock mutual funds and ETFs. 50% invested in stocks is a normal position. (75% is my max stock allocation when I am confident that markets will continue higher; 30% in stocks is my Bear market position.)
 
I trade about 15-20% of the total portfolio using the momentum-based analysis I provide here. When I see bullish signs, 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.