Challenger Layoffs ... Dallas Fed Business Outlook ... 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.
"This is maybe the most dangerous market of my
career, and that includes 1987's crash, that includes the savings and loan
debacle market of the early '90s, that includes the 1999 to 2009 lost decade in
the S&P 500 in the dot-com bubble. This is the most difficult market of my
45 years." - Bill Smead, Smead
Value Fund (SMVLX), May 2025.
“Rep. Lisa McClain (R-MI) offered a novel
explanation for why her party was roundly defeated in races across the country
on Tuesday: Republican voters were simply too happy with the status quo to be
bothered to vote.” From...
House
Republican Says GOP Lost Big on Tuesday Because Its Voters ‘Are Happy With
What’s Happening’
“Stupid is as stupid does.” – Thank-you, Forrest.
CHALLENGER LAYOFFS (CNBC)
“Layoff announcements soared in October as companies
recalibrated staffing levels during the artificial intelligence boom, a sign of
potential trouble ahead for the labor market, according to outplacement firm
Challenger, Gray & Christmas. Job cuts for the month totaled 153,074, a
183% surge from September and 175% higher than the same month a year ago. It
was the highest level for any October since 2003. This has been the worst year
for announced layoffs since 2009.” Story at...
https://www.cnbc.com/2025/11/06/job-cuts-in-october-hit-highest-level-for-the-month-in-22-years-challenger-says.html
DALLAS FED BUSINESS OUTLOOK (Dallas Fed)
“Growth in the Texas economy appears
to be slowing. The October Texas Business Outlook
Surveys indicated subdued job growth in manufacturing but contracting
employment in the service sector. Wage growth remained modest. The housing
market remained sluggish in September, while sales tax revenue rose to a record
high.” Reports at...
https://www.dallasfed.org/research/indicators/tei/2025/tei2509
MARKET REPORT / ANALYSIS
-Thursday the S&P 500 declined about 1.1% to 6720.
-VIX rose about 8% to 19.5.
-The yield on the 10-year Treasury declined to 4.089%
(compared to about this time prior market day).
MY TRADING POSITIONS:
SPY – Added 8/26/2025
XLK – Added 8/26/2025
CURRENT SUMMARY OF APPROXIMATELY 50 INDICATORS:
Today, of the 50-Indicators
I track, 20 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 daily, bull-bear spread of 50-indicators declined
from -10 to -16 (16 more Bear indicators than Bull indicators), a BEARISH
indication. I consider +5 to -5 the neutral zone. The 10-dMA curve of the
spread (purple on the chart above) smooths daily fluctuations; it continued
down, a BEARSH sign.
Over the last 3 years, it is unusual to see a -16 spread
this soon after an all-time high. In recent history, it hasn’t happened. I have
only 3 years of data on the Bull-Bear spread so we can’t conclude too much from
this stat, but it does make one wonder. The last time there was a -16 in the
first 4 days of a correction was the April 2025 19% decline.
The Fosback Hi/Low Logic Index did turn bearish Thursday.
The last time this indicator was bearish was also during the 19% decline in
April of this year after the S&P 500 had dropped about 4%. The Fosback
New-high/New-low Logic Index uses a methodology similar to the Hindenburg Omen
so today’s results from the Hindenburg Omen calculations are not a surprise.
Ruh-Roh... More of the same... Thursday there was another
Hindenburg Omen. That’s Six in the last seven days.
“The Hindenburg Omen is a technical analysis indicator
that attempts to predict stock market crashes by identifying periods of market
instability. It is named after the Hindenburg disaster, a German airship
that caught fire in 1937. The omen is triggered when specific market
conditions, such as a large number of stocks making both new 52-week highs and
lows, occur within a short time frame.” – Investopedia.
As previously noted: Hindenburg Omens don’t have a great
record of being correct; however, they do tend to give a good signal if there
is a cluster of Omens. Now we have seen 5 in 6 days. It’s a cluster.
There are now only 4 Bullish indicators: 2 are momentum
indicators and will respond to drops in the S&P 500; 1 is a breadth
indicator that will respond to declining issues outpacing advancing issues; the
last, is the spread between Utilities and the S&P 500. That one has been
flopping back and forth so it can be ignored.
Indicators are very weak and I’m tempted to reduce some
stock holdings. For confirmation, let’s look at the chart. We see that the
S&P 500 is only 0.8% above its 50-dMA. That’s a line in the sand. A drop
below the 50-dMA would be confirmation that it’s time to sell some stock. In
the mean time, I’ll probably cut my position in XLK if we see another big down-day
Friday.
I’ve been saying that a correction now would likely be
less than 10%. I think the odds of a less than 10% decline are lower now based
on the rapidly falling indicators. Still, the Index is 9.7% above its 200-dMA
and that’s a strong level of support so a 10% correction makes perfect sense.
The odds are probably still pretty good that the decline
won’t be as high as 20%. It doesn’t seem like the bull market is over. Bull
markets end with euphoria – not with a whimper.
BOTTOM LINE
I’m bearish; I’ll take profits in my XLK position if
declines continue. Beyond that, I’ll watch the chart and indicators.
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 50% stocks, including stock mutual funds and ETFs.
50% invested in stocks is a
normal, conservative position for a retiree. (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.
