Jobless Claims... PPI ... Momentum Trading DOW Stocks & ETFs … Stock Market Analysis

 
THIRD YEAR OF GAINS POSSIBLE? (WSJ)
“Wall Street is grappling with whether another year of robust gains is possible for a stock market that is looking precariously expensive. The S&P 500 has surged 28% in 2024 and is on pace for back-to-back annual jumps of more than 20% for the first time since a four-year stretch that ended in 1998. Strategists at some of the nation’s biggest banks are projecting more modest returns in 2025. JPMorgan Chase, Morgan Stanley and Goldman Sachs project that the S&P 500 will reach 6500 by the end of next year, a 6.7% increase from Friday’s close of roughly 6090. 
Others are a little more bullish. Barclays recently raised its price target to 6600. Bank of America and Deutsche Bank expect the benchmark index to hit 6666 and 7000, respectively.” Story at...
https://www.wsj.com/finance/stocks/can-stocks-pull-off-a-third-consecutive-year-of-big-gains-284b172a
 
JOBLESS CLAIMS (Yahoo Finance)
“242,000 people filed for unemployment benefits the week ending Dec. 7, an increase of 17,000 from the previous week. That was the highest since October. Setting aside a spike in October due to hurricanes Helene and Milton, it was also the highest since July.” Story at...
https://finance.yahoo.com/news/unemployment-claims-surprisingly-rose-last-142442456.html
 
PPI (CNBC)
“The producer price index, or PPI, which measures what producers get for their products at the final-demand stage, increased 0.4% for the month, higher than the Dow Jones consensus estimate for 0.2%. On an annual basis, PPI rose 3%, the biggest advance since February 2023.”  Story at...
https://www.cnbc.com/2024/12/12/producer-price-index-november-2024-.html
 
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 declined about 0.6% to 6051.
-VIX rose about 3% to 13.92.
-The yield on the 10-year Treasury rose (compared to about this time, prior trading day) to 4.336%.
 
MY TRADING POSITIONS:
XLK – Holding since the October 2022 lows.  Added more 9/20.
SSO – added 10/16.
SPY – added 9/19 & more 10/16
QLD – added 11/5.
UWM – added 11/11
 
CURRENT SUMMARY OF APPROXIMATELY 50 INDICATORS:
Today, of the 50-Indicators I track, 16 gave Bear-signs and 8 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 -8 (8 more Bear indicators than Bull indicators).
 
TODAY’S COMMENT
If you watched CNBC around mid-day today you probably heard discussions about breadth that has been declining.  I have been watching that too. Over the last 2 weeks, only 45% of issues on the NYSE have gone up.  When less than half are advancing, I consider it a bearish sign and this is one of the bear indicators we have seen for the last three days. As I look at the numbers today, we see that another Breadth measure turned bearish: over the last 50-trading sessions, only 49.8% of issues on the NYSE have been advancing.
 
Today’s Bull-Bear spread of -8 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.)
 
A -8 spread is not a critical signal. Back on 1 November the spread was -12 and that turned out to be a short-term low. The number to watch is total bull-indicators.
 
Today here were 8 bull indicators. Unless that number falls a lot more, I won’t get too worried.  If it get’s to zero, it may be time to panic. I don’t expect that it will.
 
I wrote earlier, “The daily spread did turn up today and that has often indicated a short-term bottom.” That’s true, but it only turned up by 1 indicator (-6 to -5).  Reversals in the stock market are usually accompanied by large swing in indicators.  That hasn’t happened yet so my prediction was premature.
 
The chart still looks good – the Index is not at its lower trend line so there is no trend break indicated. The Index is 2.6% above its 50-dMA, a level of strong support. There are some signs that a larger drop from here is possible. For example, the S&P 500 is closer to its upper Bollinger Band than the lower. If the market doesn’t turn up until the Index hits the lower Bollinger Band, a drop below the 50-dMA is likely.
 
BOTTOM LINE
I’m still cautiously bullish and holding positions. Still, the S&P 500 closed on its low today suggesting more selling, at least at the open tomorrow.
 
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
 
THURSDAY 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.) 
This is a short-term signal – I’m not making any changes to my portfolio.
 
 
 

...My current invested position is about 70% stocks, including stock mutual funds and ETFs. I’m usually about 50% invested in stocks when markets are stretched. (75% is my max stock allocation when I am confident that markets will continue higher.)
 
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.