... 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 am beyond outraged and in utter disbelief that President Biden would announce clemency for Ferrone Claiborne and Terence Richardson—two men who admitted for being responsible to brutally killing Officer Allen Gibson, a hero and dedicated servant to our community. What makes this even more unconscionable is the Biden U.S Attorney advised the White House not to commute these sentences as they are violent offenders. The pain and sorrow this clemency causes the Gibson family is unimaginable. To know that the men who took Officer Gibson’s life will walk free is not just a grave injustice—it is a heartbreaking blow to those who continue to mourn his sacrifice. This is despicable; a grim day for justice and for the families who trust that our system will hold the guilty accountable.” - Glenn Youngkin, Governor, Commonwealth of Virginia.
 
ANIMAL SPIRITS ARE BACK IN THE MARKETS (CNBC)
“Billionaire investor Stanley Druckenmiller believes Donald Trump’s re-election renewed a jolt of speculative enthusiasm in the markets and surging optimism within businesses. ‘I’ve been doing this for 49 years, and we’re probably going from the most anti-business administration to the opposite,” Druckenmiller said on CNBC Monday. ‘We do a lot of talking to CEOs and companies on the ground. And I’d say CEOs are somewhere between relieved and giddy. So we’re a believer in animal spirits.’” Story at...
https://www.cnbc.com/2025/01/20/stanley-druckenmiller-says-animal-spirits-are-back-in-markets-because-of-trump-with-ceos-giddy.html
 
THE BUFFET INDICATOR IS WARNING (The Telegraph)
“At least one credible market measure says it might be prudent to exercise caution. The Buffett Indicator, a trading signal conceived by legendary investor Warren Buffett, is currently at levels he has previously described as “playing with fire.” The market gauge, which compares the total market capitalization of US stocks to the country’s GDP, provides a measure of whether the stock market is overvalued relative to the total economy. With stock prices hitting record highs, concerns are growing as the indicator currently hovers around 200pc – a level last hit before the dotcom crash. In the last quarter, Buffett’s Berkshire Hathaway was a net seller of stocks, while its cash reserves swelled to an all-time high of $320bn..." Story at...
Warren Buffett’s own trading signal is flashing red across American stocks
 
MARKET REPORT / ANALYSIS AS OF 1PM FRIDAY
-Tuesday the S&P 500 rose about 0.9% to 6049.
-VIX declined about 6% to 15.06.
-The yield on the 10-year Treasury declined (compared to about this time, prior trading day) to 4.574%.
 
MY TRADING POSITIONS:
XLK – Holding since the October 2022 lows.  Added more 9/20.
 
SSO – added 12/20. (IRA acct.)
SPY – added 12/20. (IRA acct.)
QLD – added 12/20. (IRA acct.)
NVDA – added 1/6/2025
 
CURRENT SUMMARY OF APPROXIMATELY 50 INDICATORS:
Today, of the 50-Indicators I track, 1 gave Bear-signs and 22 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) improved to +21 (21 more Bull indicators than Bear indicators).
 
TODAY’S COMMENT
Stanley Druckenmiller’s comment stating that “animal spirits” are back in the market (above) is concerning.  We have previously noted that the CAPE (Cyclically Adjusted Price Earnings Ratio) is at levels not seen since the Dot.com era (prior to the 50% stock market crash that started in year 2000). That was discussed here...
http://navigatethestockmarket.blogspot.com/2024/12/chicago-pmi-momentum-trading-dow-stocks.html
We also noted today that the Buffet indicator is also at levels not seen since the dot.com crash.
 
There is a saying on Wall Street from Sir John Templeton who described investor sentiment and its relation to the market cycle as follows: “Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.”
 
We have just finished two very good, back-to-back years on Wall Street with the S&P 500 gaining 26% in 2023 and 25% in 2024, but perhaps not enough to suggest euphoria. Before the dot.com crash, there were five consecutive years of returns greater than 20% (1995 thru 1999). We note that in both 1928 and 1997 the Index gained more than 30% - that’s euphoria. In major crash-years, breadth tends to fade and markets are carried by a few stocks.  While bearish, talking-heads complain that the current stock market is being carried by the magnificent 7, it isn’t really true.  We have not observed weakness in breadth that would suggest a significant correction in more than a year.  That presaged the 10% correction that ended in October of 2023. Hopefully, my indicators will warn if there is a crash coming. For the here and now, lets’ consider the indicators.
 
The daily, bull-bear spread of +21 is Bullish. The 10-dMA of the spread is also moving higher, another bull-sign.
 
BOTTOM LINE
I am bullish. Looks like this market is hitting 88 miles per hour. “You’re gonna’ see some serious s**t.”
 
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

TUESDAY MARKET INTERNALS (NYSE DATA)

My basket of Market Internals remained BUY. (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 75% 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.