Wednesday, February 4, 2026

ADP Employment … ISM Non-Manufacturing … 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.”
 
ADP EMPLOYMENT (ADP via PR newswire)
"’Job creation took a step back in 2025, with private employers adding 398,000 jobs, down from 771,000 in 2024," said Dr. Nela Richardson, chief economist, ADP. ‘While we've seen a continuous and dramatic slowdown in job creation for the past three years, wage growth has remained stable.’… Private employers added 22,000 jobs in January. In a lackluster month for hiring, the education and health services sector was a standout, adding 74,000 jobs. Leading the slowdown was manufacturing, which has lost jobs every month since March 2024, professional and business services, and large employers.” Press report at…
 
ISM NON-MANUFACTURING (ISM)
“The Services PMI® registered 53.8 percent to start 2026 as it finished 2025, on a positive note, with its 19th month in a row in expansion territory after ISM’s most recent seasonal adjustments.” Report at…
 
-Wednesday the S&P 500 declined about 0.5% to 6883.
-VIX rose about 4% to 18.64.
-The yield on the 10-year Treasury rose to 4.278% (compared to about this time prior market day).
 
MY TRADING POSITIONS
XLK – Added 11/26/2025 & 12/1/2025
SPY – Added 12/1/2025.
NVDA – Added a small position 12/1/2025. Nvidia’s momentum is negative. That’s usually a sell-signal, even for a stock I bought as a value play. We’ll see.
 
CURRENT SUMMARY OF APPROXIMATELY 50 INDICATORS:
At the close today, of the 50-Indicators I track, 8 gave Bear-signs and 14 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 +7 to +6 (6 more Bull indicators than Bear indicators), a BULLISH indication. I consider +5 to -5 the neutral zone. The 10-dMA curve of the spread (purple on the chart above) that smooths daily fluctuations reversed down, a BEARISH sign. (It reversed upward yesterday – now it’s down.)
 
Once again, the S&P 500 dropped below its 50-dMA; it recovered to finish 0.1% above the 50-day. The 50-dMA is also the lower trend line in the bearish ascending wedge. Those levels of support are holding so far. If they fail, we’ll have a signal suggesting further downside. As long as the 50-day holds, I’ll be cautiously optimistic … up to a point.  We need to see the Index break the upper trend line of the bearish wedge - soon.
 
Since the McClellan Oscillator turned positive today, the Hindenburg Omen signal is cancelled. The Bearish Outside Reversal signal remains in place until the S&P 500 closes above the high on the Reversal Day.
 
Wednesday 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. Let’s hope that’s true tomorrow. I am tired of falling prices.
 
BOTTOM LINE
I’m cautiously bullish and fully invested.
 
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…
 
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…
 
WEDNESDAY MARKET INTERNALS (NYSE DATA)
My basket of Market Internals slipped to HOLD. (My basket of Market Internals is a decent trend-following analysis that is most useful when it diverges from the Index.) 
 
 
 
 
My invested position is about 70% stocks, including stock mutual funds and ETFs. 50% invested in stocks is a normal, conservative position for a retiree. (80% 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 although I don’t trade as much as I used to. 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.
 
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