... 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.
 
INVESTORS ARE IN A BAD MOOD (Barron’s – 3/8/2025)
“A Friday rally can’t hide the fact that the stock market is stuck in an ominous pattern—and it’s not clear what will shake it out... The biggest problem is uncertain federal policy, which appears to be causing many businesses to hold off on making investment decisions. President Donald Trump imposed tariffs on Canada, Mexico, and China before backtracking on some of the penalties and then promising even more to come.
The word “uncertainty” came up 47 times this week in the Federal Reserve’s latest Beige Book, which gathers evidence on economic conditions around the country—about three times as often as it was mentioned in January... Some investors are rotating into the kinds of companies that do well when times are tough. The market’s few winners this past week included flight-to-safety stocks like discount chain Dollar General, a Barron’s stock pick, and Colgate Palmolive... Trump’s policies have given a boost to markets outside the U.S., causing some on Wall Street to quip that MAGA has been replaced by MEGA—Make Europe Great Again. Indexes like Germany’s DAX have been on the upswing, and Ronald Temple, chief market strategist at Lazard, believes that outperformance could continue as U.S. stocks face tariff-related weakness.” Commentary at...
Investors Are in a Bad Mood. This Time, They Might Be Right.
My cmt: The above was written before today’s debacle. Today, we didn’t need anyone to tell us investors are in a bad mood.
 
RECESSION ISN’T IN THE CARDS YET (CNBC)
“Dubbing Trump an ‘agent of chaos and confusion,’ Schmieding [chief economist at Berenberg Bank] said the president’s ‘zigzagging on tariffs shows that he has little idea of the potential consequences of his tariff policies.’ Nonetheless, ‘U.S. consumers have money to spend, [and] they probably will. The labor market in the U.S. remains reasonably firm, and with energy prices coming down a bit and probably some tax cuts and deregulation coming, I don’t think there’s an imminent recession risk,’ according to Schmieding.” Story at...
https://www.cnbc.com/2025/03/10/trump-an-agent-of-chaos-and-confusion-economists-warn.html
 
MARKET REPORT / ANALYSIS AS OF 1PM FRIDAY
-Monday the S&P 500 fell about 2.7% to 5615.
-VIX jumped about 19% to 27.89.
-The yield on the 10-year Treasury declined (compared to about this time, prior trading day) to 4.219%.
 
MY TRADING POSITIONS:
None
 
CURRENT SUMMARY OF APPROXIMATELY 50 INDICATORS:
Today, of the 50-Indicators I track, 15 gave Bear-signs and 9 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
3 weeks ago, at the S&P 500 all-time high, sentiment was 96%-bulls (5-day average of %-Bulls (Bulls/{bulls+bears}) based on the amounts invested in selected Rydex/Guggenheim, long/short mutual funds). Friday, my sentiment reading was 95%-bulls. These are very high readings and the fact that they have hardly declined in the last 3-weeks suggests this pullback has farther to go. Maybe after today’s close we’ll see more shorting in the Rydex funds.
 
As of today’s close, the S&P 500 was down 8.2% from its all-time high. Those who made bets last week that the 200-dMA would hold were disappointed today. Monday the S&P 500 closed 2% below its 200-day.
 
Previously, I mentioned a Jeffrey Saut (former head of trading for Raymond James) quote during another correction, “...we could be in one of these “selling stampedes” that tend to last 17 – 25 sessions, with only 1.5 - to three-day pauses/throwback rallies, before they exhaust themselves on the downside... but “Never on a Friday.”
 
I think we can safely say that we ARE in one of those selling stampedes. The “Never on Friday” reference was that “...once the markets get into one of these weekly downside skeins, they rarely bottom on a Friday....they typically give participants over the weekend to brood about their losses and then they show up the next Monday in “sell mode” leading to Turning Tuesday.” So, is tomorrow likely to be a “Turning Tuesday?” No – today (Monday) is only day-13. We are likely to see another week or two of selling.
 
The daily, bull-bear spread of 50-indicators improved to a Bearish -9 (9 more Bear indicators than Bull indicators). The 10-dMA of the spread reversed higher, but it looks like a fake out. Numbers are improving, but some of that improvement is due to “oversold” indicators that are giving buy-signals.  Unfortunately, in significant pullbacks, we must mostly ignore oversold-signals and use other methods to call a bottom. In addition, my 50-Indicator Summary has not been around long enough to gauge its usefulness in a bigger downturn.
 
BOTTOM LINE
No bottom yet. I am bearish with a very conservative allocation of only about 30% invested in stock holdings.
 
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 30% stocks, including stock mutual funds and ETFs – extreme 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.