Construction Spending .... ISM Manufacturing ... 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.
 
THE DUMBEST TRADE WAR IN HISTORY (WSJ - Excerpt)
“President Trump will fire his first tariff salvo on Saturday against those notorious American adversaries . . . Mexico and Canada. They’ll get hit with a 25% border tax, while China, a real adversary, will endure 10%. This reminds us of the old Bernard Lewis joke that it’s risky to be America’s enemy but it can be fatal to be its friend... As the Cato Institute’s Scott Lincicome puts it, the data show that “as imports go up, U.S. production goes up.” Thousands of good-paying auto jobs in Texas, Ohio, Illinois and Michigan owe their competitiveness to this ecosystem, relying heavily on suppliers in Mexico and Canada.
Tariffs will also cause mayhem in the cross-border trade... None of this is supposed to happen under the U.S.-Mexico-Canada trade agreement that Mr. Trump negotiated and signed in his first term. The U.S. willingness to ignore its treaty obligations, even with friends, won’t make other countries eager to do deals. ...But if a North American trade war persists, it will qualify as one of the dumbest in history.” – Editorial Board, WSJ.
https://www.wsj.com/opinion/donald-trump-tariffs-25-percent-mexico-canada-trade-economy-84476fb2
My cmt: WSJ is a conservative newspaper that has supported Trump in the past.
 
TRUMP’S RESPONSE
"The 'Tariff Lobby,' headed by the Globalist, and always wrong, Wall Street Journal, is working hard to justify Countries like Canada, Mexico, China, and too many others to name, continue the decades long RIPOFF OF AMERICA, both with regard to TRADE, CRIME, AND POISONOUS DRUGS that are allowed to so freely flow into AMERICA...THOSE DAYS ARE OVER! The USA has major deficits with Canada, Mexico, and China (and almost all countries!), owes 36 Trillion Dollars, and we’re not going to be the 'Stupid Country' any longer."
"MAKE YOUR PRODUCT IN THE USA AND THERE ARE NO TARIFFS! Why should the United States lose TRILLIONS OF DOLLARS IN SUBSIDIZING OTHER COUNTRIES, and why should these other countries pay a small fraction of the cost of what USA citizens pay for Drugs and Pharmaceuticals, as an example? THIS WILL BE THE GOLDEN AGE OF AMERICA! WILL THERE BE SOME PAIN? YES, MAYBE (AND MAYBE NOT!). BUT WE WILL MAKE AMERICA GREAT AGAIN, AND IT WILL ALL BE WORTH THE PRICE THAT MUST BE PAID. WE ARE A COUNTRY THAT IS NOW BEING RUN WITH COMMON SENSE — AND THE RESULTS WILL BE SPECTACULAR!!!" – President Donald Trump
 
CONSTRUCTON SPENDING (Yahoo Finance)
“The Commerce Department's Census Bureau said on Monday that construction rose 0.5% after an upwardly revised 0.2% increase in November. Economists polled by Reuters had forecast construction spending would advance 0.2% after being previously reported as unchanged in November.” Story at...
https://finance.yahoo.com/news/us-construction-spending-beats-expectations-154215420.html
 
ISM MANUFACTURING (PR NewsWire)
"The Manufacturing PMI® registered 50.9 percent in January, 1.7 percentage points higher compared to the seasonally adjusted 49.2 percent recorded in December. The overall economy continued in expansion for the 57th month after one month of contraction in April 2020. (A Manufacturing PMI® above 42.3 percent, over a period of time, generally indicates an expansion of the overall economy.)” Press release at...
https://www.prnewswire.com/news-releases/manufacturing-pmi-at-50-9-january-2025-manufacturing-ism-report-on-business-302365753.html
 
MARKET REPORT / ANALYSIS AS OF 1PM FRIDAY
-Monday the S&P 500 declined about 0.8% to 5995.
-VIX rose about 13% to 18.62.
-The yield on the 10-year Treasury rose (compared to about this time, prior trading day) to 4.563%.
 
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.
 
The decline in Nvidia appears to be overblown. Regarding competition to Nvidia, Dan Ives (Managing Director and Senior Equity Research Analyst covering the Technology sector at Wedbush Securities) says, “The threat is minimal.” He recommended buying Nvidia. I will hold NVDA and see what develops... 
 
CURRENT SUMMARY OF APPROXIMATELY 50 INDICATORS:
Today, of the 50-Indicators I track, 9 gave Bear-signs and 11 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 +2 (2 more Bull indicators than Bear indicators).
 
TODAY’S COMMENT
The daily, bull-bear spread of 50-indicators has dropped to a Neutral +2. We can’t be encouraged by the falling indicators. The 10-dMA of the spread is now falling, a bearish sign.
 
I didn’t mention it earlier, but Friday, unchanged volume was very high. As I’ve often said, many believe that this indicator suggests investor confusion at market turning points. The trend has been higher for a while. If one believes this indicator, the trend is now down. Perhaps the best we can say is that investors are confused. “High-unchanged-volume” is not one of my indicators because it is often wrong.
 
S&P 500 closed on the 50-dMA, Monday. A good sign for the bulls.  We’ll have to see if the 50-day holds Tuesday. It may, after the following news came out not long ago:
“Stock futures rose Monday night after U.S. President Donald Trump paused planned tariffs on goods from Canada, just hours after a reprieve was also announced on expected levies against Mexico.” – CNBC.
 
I cut stock holdings today as I posted earlier. Even with the tariffs postponed, I think it is a good move to reduce risk. This is not the time to be “all-in.”
 
BOTTOM LINE
I am neutral and fully invested – 50% in stocks.
 
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 that is most useful when it diverges from the Index.) 
 
 
 

...My current invested position is about 50% stocks, including stock mutual funds and ETFs, but I need to check the numbers. 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.