Housing Starts / Permits... 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.
 
“And when the courts ... stop you, stand before the country like Andrew Jackson did and say: ‘The chief justice has made his ruling. Now let him enforce it...’" – JD Vance, VP.
 
"I think you can dislike the court's opinion and think they're wrong on the substance, and criticize them for that, and you certainly can vigorously appeal...And you can also read a mandate—you know, when a court issues an opinion, they issue what's called a mandate that sort of sets the direction ... It's perfectly fine to read that very narrowly, to be like, 'All right, fine, you said to do this and we're going to do that, but we're going to do only that, we're not going to apply it broadly..."I think outright, sort of just, like, 'Oh, we're just going to completely ignore the decision?' That, I think you can't do. Andrew Jackson did that, infamously. He was wrong on that. That was the Trail of Tears. That was lawless. That was wrong." – Republican Senator Josh Hawley, Missouri.
My cmt: If enough Republicans agree, maybe the next impeachment will stick.
 
TRUMP SELLS OUT UKRAINE (Newsweek)
“Speaking on his peace talks with Russian President Vladimir Putin, Trump told reporters that Ukraine did not need a seat at the negotiating table because it "should've ended [the war] in three years. You should have never started it. You could have made a deal." Story at...
https://www.newsweek.com/trump-says-ukraine-should-have-never-started-war-russia-2033014
My cmt: Proving once again that Trump is an unhinged idiot. A deal? Sure, become a province of Russia and accept the murder of Zelinsky and all of Ukraine’s politicians in the aspiring democracy. Trump has no sense of history.
P.S. I am a retired civil service employee. I mention that because if I was working, I wouldn’t want to be DOGE’d.
 
TURNING OLD HOSPITALS INTO HOUSING (WSJ)
“Across the country, closed hospitals and their land are becoming a prime target for towns looking to boost limited housing stock. Hospitals offer features that make them readily adaptable to homes, such as tall ceilings, broad hallways and abundant natural light... The U.S. government is incentivizing the process, too. Federal historic tax credits to these conversions are skyrocketing while demand for housing stays high.” Story at...  
https://www.wsj.com/real-estate/former-hospitals-residential-housing-bae7c276
My cmt: Our Government is giving away hundreds of millions of dollars to “incentivize” a process that would be ongoing with no incentive. More Congressional waste.
 
INVESTORS HAVEN’T BEEN THIS PESSIMISTIC SINCE 2023 (WSJ)
“Bearishness among individual investors—measured by the percentage who expect stock prices to fall over the next six months—reached 47.3% for the week ended Feb. 12, according to the latest survey from the American Association of Individual Investors. That is the highest level since November 2023.” Story at...
https://www.wsj.com/finance/stocks/investor-sentiment-outlook-aaii-survey-725a24bb?mod=md_usstk_news
 
HOUSING STARTS / PERMITS
U.S. single-family homebuilding fell sharply in January amid disruptions from snowstorms and freezing temperatures, with a rebound likely to be limited by higher costs from tariffs on imports and elevated mortgage rates... Single-family housing starts, which account for the bulk of homebuilding, dropped 8.4% to a seasonally adjusted annual rate of 993,000 units last month... Permits for future construction of single-family housing were unchanged...” Story at...
https://finance.yahoo.com/news/us-single-family-housing-starts-133805236.html
 
MARKET REPORT / ANALYSIS AS OF 1PM FRIDAY
-Wednesday the S&P 500 rose about 0.2% to 6144.
-VIX declined about 0.5% to 15.27.
-The yield on the 10-year Treasury declined (compared to about this time, prior trading day) to 4.535%.
 
MY TRADING POSITIONS:
XLK – Holding since the October 2022 lows.  Added more 9/20/2024.
QLD – added 12/20/2024. (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, 8 gave Bear-signs and 17 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.)

 
TODAY’S COMMENT
The above WSJ article says that investors are pessimistic. Maybe, but that’s not how they are betting. I measure Sentiment as a 5-day moving average of %-Bulls (Bulls/{bulls+bears}) based on the amounts invested in selected Rydex/Guggenheim long and short mutual funds. My sentiment reading is based on what individual investors are betting – it is a very bullish 96%-bulls. This is close to being too bullish, which is a bearish indication.
 
The Bollinger Squeeze I mentioned yesterday resolved today, but I still would not be surprised to see a breakout.  Based on today’s action, it looks more like a breakout is likely to be down.
 
At the 4pm close, the CNBC anchors were discussing with a guest how the market has broadened out.  Don’t count on it. There was a new, all-time high on the S&P 500 Wednesday. When markets are at new, all-time highs, we expect to see a lot of individual stocks making new, 52-week highs.  That didn’t happen today. The number of new-52-week highs was too low and is now giving a warning: a correction is coming and it is likely to be greater than 10%.
 
Another measure of Breadth is slipping too.  The % of issues advancing on the NYSE are falling. The 50-dMA of this indicator is already bearish and the 10-day and 100-day (shown in the chart below) are also falling.
  

 
Even with some indicators looking bad, I don’t want to get too bearish. The daily, bull-bear spread of 50-indicators improved to a Bullish +9 (9 more Bull indicators than Bear indicators). The 10-dMA of the spread is still headed higher, another bullish sign.
 
Still if breadth continues to weaken, I’ll need to get more conservative from an investing perspective. Until then, I’ll watch indicators.
 
BOTTOM LINE
I am cautiously bullish – 60% 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
 
WEDNESDAY 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 60% 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.