Business Optimism ... 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 should not try to ‘catch a falling knife...This is an epic economic and market event similar to 1971 and the end of the gold standard except with immediate negative consequences...Trump can’t back down anytime soon...He’s too macho for that.” – Bill Gross,
 
“In recent years, our most reliable measures of stock market valuation have pushed beyond their 1929 and 2000 peaks, and I’ve described the period since early 2022 as the extended peak of the third great speculative bubble in U.S. history. In my view, that process is now complete. The stock market faces severe downside risk ahead, and the U.S. is constrained in the unsystematic monetary and fiscal expansion that both amplified that bubble and fueled record but wholly impermanent corporate profit margins. Meanwhile, the U.S. economy now faces an imminent recession, and if we fail to be vigilant, we, once united Americans, risk losing what is far greater and more valuable than money.” – John Hussman, PhD.
My cmt: In my opinion, Mr. Hussman is a “Perma Bear,” but even a broken clock is right twice a day. He may be right this time.
 
NFIB BUSINESS OPTIMISM (NFIB)
“The NFIB Small Business Optimism Index declined by 3.3 points in March to 97.4, falling just below the 51-year average of 98. The Uncertainty Index decreased eight points from February’s second highest reading to 96.
“The implementation of new policy priorities has heightened the level of uncertainty among small business owners over the past few months.” said NFIB Chief Economist Bill Dunkelberg.  “Small business owners have scaled back expectations on sales growth as they better understand how these rearrangements might impact them.” – Press release at...
https://www.nfib.com/news/press-release/new-nfib-survey-small-business-optimism-slips/
 
MARKET REPORT / ANALYSIS AS OF 1PM FRIDAY
-Tuesday the S&P 500 declined about 1.6% to 4983.
-VIX rose about 10% to 51.81.
-The yield on the 10-year Treasury rose to 4.285% (compared to about this time prior market day).
 
MY TRADING POSITIONS:
NONE
 
CURRENT SUMMARY OF APPROXIMATELY 50 INDICATORS:
Today, of the 50-Indicators I track, 25 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.)
 
All the bullish indicators are related to the oversold markets so the improvement in indicators doesn’t mean much.
 

TODAY’S COMMENT

Another ugly, daily chart to the left.                

The daily, bull-bear spread of 50-indicators improved slightly, but remained bearish at -18 (18 more Bear indicators than Bull indicators) - the 10-dMA of the spread continued down – another bearish sign.  As noted above, all the bullish indicators are related to the oversold markets so the improvement in indicators doesn’t mean much.
 
There’s not much more to say.  Over the last 50-years, the Waterfall Phase (a nearly straight down decline toward the end of a correction) has lasted from 1-week to 2-months with an average duration of 1-month.  This time? Who knows, since it is mostly manmade. What will Trump do?  No clue, so I am following technical indicators.
 
Steve (Big Short) Eisman was on CNBC yesterday.  He said the US was in better position to weather Tariffs than the rest of the world.  For example, Canada gets a quarter of their GDP from the US.  If common sense prevailed, they would immediately go to zero tariffs rather than try to fight with the US since we could hold out longer. He argued that is true of the rest of the world as well, but not everyone agrees.
 
An economist on CNBC noted today that there is a problem with that argument. Trump is taking on the entire world at once. Our trading partners can trade with each other while we will be isolated. That seems logical and should be a warning to tariff supporters.
 
BOTTOM LINE
I am bearish.
 
ETF - MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs (Ranked Daily) ETF ranking follows:
All of the ETFs I track are below their 120-dMA the chart is blowing up. None have positive momentum, but Utilities (XLU) are #1.
 
DOW STOCKS - TODAY’S MOMENTUM RANKING OF THE DOW 30 STOCKS (Ranked Daily)
Since almost all the Dow 30 stocks are below their 120-dMA, the chart is blowing up. The only Dow stocks with positive momentum are KO (#1) United Health (#2) and VZ (#3) and McDonalds (#4).
 
TUESDAY 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.) 
 
 
 

Oops – I forgot to change the graphics. I returned to a defensive position last Friday, 4 April...My current invested position is about 30% 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.