NY Fed 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.
 
ALARMING REPORT SHOWS THE U.S. DROWNING IN RED INK (New York Post)
“The federal government is racing toward a fiscal cliff, with a new report citing a mind-numbing $838 billion cash shortfall just for the first four months of the fiscal year.
Yet Democrats are losing their minds over Team Trump’s efforts to trim fat and waste. Do they want the Uncle Sam to go belly up?” Story at...
Alarming report shows US drowning in red ink — as Democrats block spending cuts
My cmt: Musk and Trump are firing a lot of Government employees, including all probationary employees (less than 1 year of service), but the entire Government workforce is less than 1.5% of the total US non-farm employment according to the Center for Economic and Policy Research. It was 4.5% back in the 40’s so government employment may not be as bloated as believed. But cutting employees won’t make much difference in the deficit. The problem are the programs that Congress and prior Administrations (Democrat and Republican) have created over the years. That waste will be hard to eliminate.  For example...
 
There is still a requirement to make gasoline with 10% ethanol that dates to the gas crisis of the 1970’s when Saudi Arabia formed the Oil Cartel. The theory was that adding 10% ethanol derived from corn would cut gasoline needs by 10%. Now, the US produces more energy than it uses so there is no need for ethanol in gasoline. Worse, the ethanol destroys small engine carburetors and hoses since it attracts water. Cost wise, I suspect it does not save money since there are ethanol subsidies and energy is required to make the ethanol. It also diverts feed corn to fuel production that drives up the cost of beef. In Trump’s first presidency there was a push to do away with the ethanol requirement for gasoline, but there were too many congressional districts that would be hurt, so the waste continues. Farm dependent counties are overwhelmingly Republican so don’t expect that they will all line up behind DOGE when their constituents are hurt.
 
The Renewable Fuels Association states, they “...will continue our diligent efforts with Congress and the administration to ensure renewable fuels have a prominent role in our nation’s energy strategy. From removing arcane barriers that prevent year-round consumer access to higher ethanol blends (like E15) to protecting the Renewable Fuel Standard to ensuring smooth and rational implementation of clean energy tax provisions from last year’s Inflation Reduction Act, we will continue to work with our nation’s leaders to capture ethanol’s full potential as a homegrown, low-carbon, low-cost energy source.” In other words, they have a good lobby and will continue to payoff congress; we all know that our representatives only care about getting themselves reelected. And this is only one small example of waste, fraud and abuse.  
 
Here are a few examples of DOGE budget savings.
DOGE PROGRESS (DOGE.com)
“-Today, the Department of Education terminated 29 DEI training grants totaling $101mm. One sought to train teachers to “help students understand / interrogate the complex histories involved in oppression, and help students recognize areas of privilege and power on an individual and collective basis.“ - 07:13 PM · Feb 10, 2025
Today,the Department of Agriculture terminated 18 contracts for a total of ~$9mm, including contracts for “Central American gender assessment consultant services,” "Brazil forest and gender consultant services”, and the “women in forest carbon initiative mentorship program.” 05:58 PM · Feb 10, 2025.
-Great coordination across 35 agencies over the last two days to terminate 199 wasteful contracts saving ~$250mm, including: -Contract for “Asia Pacific - Sri Lanka climate change mitigation adaption and resilience coordinator services for forest service”
-Workshop for “Intercultural communication diversity dialogue circle communicating across differences” - 9:04 PM · Feb 7, 2025
From...
https://doge.gov/
My cmt: I’ve commented previously that the President can’t cancel appropriated funds that have been authorized in law. Appropriations Bills are passed by both Houses of Congress and signed into law by the President. The exception to that rule would be in cases where Congress authorized the Executive Branch (including specific Executive Branch Agencies, such as EPA, Energy and Education) to make grants up to a specified amount. Those grants would be discretionary to the agency, so unspent funds can be rescinded (my opinion).
 
Congress has gotten lazy about how they dole out funds. When the US “saved” Chrysler, Congress passed the Chrysler Corporation Loan Guarantee Act of 1979 that gave them a 1.5-billion-dollar loan. The bill was signed into law by President Jimmy Carter on January 7, 1980. Now Congress will often pass a law that creates slush funds managed by agencies.  That’s how Rivian got a 6.7-billion-dollar loan from DOE. From a google search: “The Department of Energy's (DOE) Loan Programs Office (LPO) provides loans and loan guarantees for clean energy, transportation, and Tribal energy projects. The process includes pre-application consultations, application and review, due diligence, and financial closing.”
 
NY FED MANUFACTURING (NY Fed)
“Business activity edged higher in New York State in February, according to firms responding to the Empire State Manufacturing Survey. The headline general business conditions index climbed eighteen points to 5.7.” Report at... 
https://www.newyorkfed.org/survey/empire/empiresurvey_overview
 
MARKET REPORT / ANALYSIS AS OF 1PM FRIDAY
-Tuesday the S&P 500 rose about 0.2% to 6130.
-VIX rose about 4% to 15.35.
-The yield on the 10-year Treasury rose (compared to about this time, prior trading day) to 4.552%.
 
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, 7 gave Bear-signs and 15 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
There was a new, all-time high on the S&P 500 Tuesday. Based on the number of new-52-week highs if we do have a correction (and I'm not predicting one), it is more likely that it would be less than 10%.
 
Today, there was a Bollinger Squeeze that occurs when Bollinger Bands are close together. “A Bollinger Band... is defined by a series of lines that are plotted two standard deviations—both positively and negatively—away from the simple moving average (SMA) of the price of an asset... A Squeeze is triggered when volatility reaches a six-month low and is identified when Bollinger Bands reach a six-month minimum distance apart...” The Bollinger Squeeze predicts a big move (breakout) in the S&P 500, but it doesn’t tell us the direction of such a move. To determine breakout direction, Bollinger suggests looking at other indicators. He suggests using the relative strength index (RSI). Bollinger bands are discussed at Investopedia...
https://www.investopedia.com/terms/a/accumulationdistribution.asp
RSI is in the middle of its range so it will not tell us what direction a breakout may be. In addition, Bollinger mentions a few other indicators I don’t use.  Looking at some of my indicators, we see the following: Buying-pressure minus selling-pressure is basically flat. Volume is bullish. The Preponderance of indicators is bullish - The daily, bull-bear spread of 50-indicators improved to a Bullish +8 (8 more Bull indicators than Bear indicators). The 10-dMA of the spread reversed upward, another bullish sign.
 
We might guess that the move will be higher, but the S&P 500 is near the top Bollinger Band and that suggests a drop, so I won’t try to trade the move.
 
There was also very High unchanged volume today. As I’ve often said, many believe that this indicator suggests investor confusion at market turning points. Are markets turning back 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.
 
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

TUESDAY MARKET INTERNALS (NYSE DATA)

My basket of Market Internals improved to 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.