Jobless Claims ... 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.
JOBLESS CLAIMS (WSJ)
“Fewer Americans filed for initial jobless benefits last
week, reversing a spike in the previous week's data... The week through March 1
brought 221,000 initial jobless claims, compared with 242,000 a week earlier.”
Story at...
https://www.wsj.com/livecoverage/stock-market-today-dow-sp500-nasdaq-live-03-06-2025/card/jobless-claims-fell-last-week-federal-worker-claims-rose-in-february-UB57ownrqyCzIcYpMLnV
MARKET REPORT / ANALYSIS AS OF 1PM FRIDAY
-Thursday the S&P 500 fell about 1.8% to 5739.
-VIX rose about 13% to 24.87.
-The yield on the 10-year Treasury declined (compared to
about this time, prior trading day) to 4.28%.
MY TRADING POSITIONS:
None
CURRENT SUMMARY OF APPROXIMATELY 50 INDICATORS:
Today, of the 50-Indicators I track, 17 gave Bear-signs
and 7 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 daily, bull-bear spread of 50-indicators improved to
a Bearish -10 (10 more Bear indicators than Bull indicators). The
10-dMA of the spread continued falling, a bearish sign.
I’ll ignore the slight improvement in today’s indicator
spread. Two of the bullish indicators today (Bollinger Bands and RSI) are
signaling “oversold,” but today, they may not mean as much as they meant 2 days
ago. Then, we were due for a bounce. Now, we must recognize that oversold
conditions can last a long time and we might not see a bounce tomorrow.
The most surprising part of this ongoing decline has been
the Sentiment numbers. I measure Sentiment as a 5-day average of %-Bulls
(Bulls/{bulls+bears}) based on the amounts invested in selected Rydex/Guggenheim,
long/short mutual funds. This is a better measure than polling individual
investors, because it shows where individual investors are placing their money.
Currently, 96% of the investors are betting long (96%-bulls). That’s an extreme
number and it has been extreme for some time.
I suspect when the numbers come in tonight, it will fall – sooner or
later, investors will wake up and smell what the bear is doing in the woods.
For a bottom, I expect the S&P 500 to drop into the
close. Today there was some recovery after 3pm or so. My statistical analysis also
suggests that a bottom will come on a much bigger down-day. That sounds scary
since the Index was down about 1.8% today. A bottom needs to come on real panic
to create the washout.
So far, the drop from the all-time high is 6.2%. My
numbers suggested a drop of 10% or greater during this correction due to poor
breadth that we noted at the all-time high 2-weeks ago.
The S&P 500 closed about 0.1% above its 200-dMA,
close enough to be “on” the 200-dMA, but I
generally look for a retest of the low to call a bottom.
Today might be considered as a retest of the Tuesday low;
the close was about three-quarter-percent lower than the prior low. Volume was
lower and the internals suggest that the S&P 500 may have made a bottom
today. I’ll look for a confirmation tomorrow, but I doubt that I’ll be a buyer
before Monday, even if tomorrow is an up-day. Tomorrow’s action could be just a
fake out at the 200-day. A lot of investors may buy just because the index hit
the 200-dMA.
BOTTOM LINE
I am bearish with a very conservative allocation of only
about 30% invested in stock holdings. As for a bottom – we’ll see.
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.)
...My current invested
position is about 30% stocks, including stock mutual funds and ETFs – somewhat
bearish. (I’ll need to recalculate the %.) 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.
