Thursday, February 5, 2026

Jobless Claims … Challenger Layoffs … 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.”
 
JOBLESS CLAIMS (Yahoo Finance)
“Initial claims for ‌state unemployment benefits jumped 22,000 to a seasonally adjusted 231,000 for the week ended January 31, the ‌Labor Department said on Thursday. Economists polled by Reuters had forecast 212,000 claims for the latest week. Heavy snow and freezing temperatures blanketed large portions of the country towards the end of January, which could have left some people unemployed temporarily.” Story at…
 
CHALLENGER LAYOFFS (Challenger, Gray & Christmas)
“U.S.-based employers announced 108,435 job cuts in January, an increase of 118% from the 49,795 cuts announced in the same month last year. It is up 205% from the 35,553 job cuts announced in December, according to a report released Thursday from global outplacement and executive coaching firm Challenger, Gray & Christmas.” Report at…
 
-Thursday the S&P 500 declined about 1.2% to 6798.
-VIX rose about 17% to 21.77.
-The yield on the 10-year Treasury declined to 4.188% (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, 15 gave Bear-signs and 8 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 +5 to -7 (7 more Bear indicators than Bull indicators), a BEARISH indication. (Yesterday’s numbers changed based on data that comes in late.) I consider +5 to -5 the neutral zone. The 10-dMA curve of the spread (purple on the chart above) that smooths daily fluctuations continued down, a BEARISH sign.
 
The S&P 500 dropped below its 50-dMA. In addition, there was a breakdown in the bearish wedge. Neither were good news. Now we need to see if the Index will close below its 50-dMA on consecutive days. That would suggest a trend change.
 
Thursday there was another Hindenburg Omen.
“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.
 
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. So far, we’ve seen two. The short-term Fosback High-Low Logic Index uses a similar method of analysis. It is also now issuing a sell.
 
Breadth is falling and again is issuing a warning signal - over the last 2 weeks, more issues on the NYSE have gone down than have gone up.
 
Not all of the news is bad:
-Bollinger Bands are now oversold giving a buy-signal. RSI is not confirming the Bollinger Band, buy-signal, but it is not far from a buy.
-Thursday 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.
-Recent declines have stopped at the 100-dMA.  The S&P 500 closed at its 100-dMA. Will it stop the decline this time? If not, I’ll be selling some stocks.
 
Futures are down as I write tonight’s note so it’s a good time to check the status of the decline. The S&P 500 is 2.3% below its all-time high. Based on breadth at the all-time high, a decline greater than 10% is less likely, but not impossible.
 
BOTTOM LINE
I’m neutral to bearish.
 
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…
 
THURSDAY 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 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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