... 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.
 
“Trump reposted a link on his Truth Social platform Friday morning to the minute-long video which opened: ‘Trump is crashing the stock market…this month, but he’s doing it on purpose...’ [Trump claims he planned the stock market crash???!!] The legendary investor Warren Buffett believes Trump is making the “best economic moves” in five decades, according to the video shared by Trump, but Buffett made no such comments. Buffett’s company Berkshire Hathaway confirmed the billionaire made no such flattering remarks in a Friday statement, calling the “comments allegedly made by Warren E. Buffett...false.” Story at...
https://www.forbes.com/sites/dereksaul/2025/04/04/trump-shares-claim-hes-crashing-stock-market-on-purpose-as-he-lobbies-for-emergency-rate-cuts/
 
MARKET REPORT / ANALYSIS AS OF 1PM FRIDAY
-Friday the S&P 500 fell about 6% to 5074.
-VIX jumped about 51% to 45.31.
-The yield on the 10-year Treasury declined to 4.00% (compared to about this time prior market day).
 
MY TRADING POSITIONS:
XLK added 3/24/2025
SPY added 3/25/202

NONE

 
CURRENT SUMMARY OF APPROXIMATELY 50 INDICATORS:
Today, of the 50-Indicators I track, 25 gave Bear-signs and 4 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 chart to the left shows a correction in 2001. We note a common correction pattern: a drop from the top; a rebound off the drop and finally, toward the end of the Correction, there is frequently a “waterfall decline.” That’s the straight-down phase of a correction at, or close to, the final correction bottom.  This type of decline is typical at the end of bigger corrections. Given the big moves we have seen recently, we must consider that the ongoing correction (already down 17%) is a bigger correction. The key point here is that the ongoing correction may have a lot farther to go.
 
I looked at 9 corrections since 1970.  From the start of the waterfall phase to the end of the correction took, on average, 29 days. The average decline was 24%. That’s not the total decline, that’s just the decline from the start of the Waterfall Phase. It appears that we’re starting the waterfall phase now.
 
That suggested to me that selling now was still a reasonable action to reduce risk. As a retiree, it is more important to avoid losses than it is to worry about missing some gains if I miss the turn higher.
  

Once again, the S&P 500 closed at its low.  This is not recipe for a bounce back, but a short-term bounce is always possible. There were oversold bullish signs such as Bollinger Bands, RSI, and S&P 500 vs Breadth.
 
We saw a rare, bearish-sign today; Friday was a 90% down-volume day with negative momentum at the close. From Lowry Research: “A single, isolated 90% Downside Day does not, by itself, have any long-term trend implications, since they often occur at the end of short-term corrections. But, because they show that investors are in a mood to panic, even an isolated 90% Downside Day should be viewed as an important warning that more could follow.“ I think we are beyond the “short-term correction” category so it seems likely we could see another 90% down-volume, day before an end to this correction.
 
The daily, bull-bear spread of 50-indicators declined and remained bearish at -21 (21 more Bear indicators than Bull indicators) - the 10-dMA of the spread continued down – another bearish sign.
 
Friday was a statistically significant down-day. That just means that the price-volume move exceeded my statistical parameters. Statistics show that a statistically-significant, down-day is followed by an up-day about 60% of the time. That is not true during waterfall declines as we saw today. The huge down move Thursday was followed by bigger down move Friday.
 
To hear the breathless commentary from the CNBC talking heads, one might think a 6% down day is un-precedented. During the 34% corona-virus decline in 2020 there was a 12% down-day that was preceded by two down-days higher than 9%. That was a waterfall!
 
Volume was huge again today, indicating more selling and fear when compared to the prior low. Today was not a bottom – but it might be close, but probably not.
 
BOTTOM LINE
I am bearish at this point.
 
ETF - MOMENTUM ANALYSIS:
TODAY’S RANKING OF 15 ETFs (Ranked Daily) ETF ranking follows:
Since almost all of the ETFs I track are below their 120-dMA the chart is blowing up. The only 2 ETFs with positive momentum are IEFA and XLU.
 
DOW STOCKS - TODAY’S MOMENTUM RANKING OF THE DOW 30 STOCKS (Ranked Daily)
Since almost all of the Dow 30 stocks are below their 120-dMA so the chart is blowing up. The only 2 Dow stocks with positive momentum are KO (#1) and VZ.
 
FRIDAY 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. 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.