Monday, April 6, 2026

ISM Manufacturing … Payroll Report … 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.”
 
TRUMP APROVAL ON THE ECONOMY HITS A NEW LOW (USA Today)
“President Donald Trump received his worst approval on the economy across both his presidencies in a new poll by CNN/SSRS released April 1. The poll found 31% of Americans approve of how Trump is handling the economy…” Story at…
My cmt: What a curious finding. There are countless reasons to disapprove of Trump, but by most accounts, the economy is in good shape. Business Schools used to teach that the lowest possible unemployment rate was 4%. It is currently 4.3%, close to “max full-employment.” I suspect that poll respondents don’t like high inflation. But that is a holdover from the Biden tenure when inflation hit 9% per year. At that rate, prices double every 8-years. Inflation was 2.4% in February. Prices double every 30 years at the current inflation rate.
 
The FED has a target inflation rate of 2%. You may wonder why it isn’t zero. The reason is Economists are afraid of deflation, when prices are falling. In that scenario, no one buys anything since they are waiting for lower prices. If no one is buying, there would be massive layoffs in retail, auto, manufacturing, etc. Falling prices aren’t good if they persist.
 
JANIE DIMON LETTER (Barrons)
“’The skunk at the party—and it could happen in 2026—would be inflation slowly going up, as opposed to slowly going down,’ Dimon wrote on Monday in his annual letter to shareholders. ‘This alone could cause interest rates to rise and asset prices to drop. Interest rates are like gravity to almost all asset prices,’ Dimon added. And falling asset prices at one point can change sentiment rapidly and cause a flight to cash.’” Story at…
 
“Never, never, never, believe any war will be smooth and easy, or that anyone who embarks on that strange voyage can measure the tides and hurricanes he will encounter. The Statesman who yields to war fever . . . is no longer the master of policy but the slave of unforeseeable and uncontrollable events.” - Winston Churchill.
 
60% UPSIDE FOR TWO STOCKS (Motley Fool)
“The Nasdaq Composite is off nearly 10% as investors factor in the risk that artificial intelligence (AI) agents could pressure demand for software from some industry leaders. That fear isn't baseless. But for large, enterprise-grade platforms, AI is more likely to increase their value to customers.
This is why Wall Street analysts still see significant upside for ServiceNow (NYSE: NOW) and Microsoft (NASDAQ: MSFT). Analysts aren't always right, but there are good reasons these companies could be rewarding investments for patient investors.” Story at…
 
THE LAST TIME THE STOCK MARKET WAS THIS EXPENSIVE… (Motley Fool)
“The S&P 500 (SNPINDEX: ^GSPC) recorded a cyclically adjusted price-to-earnings (CAPE) ratio of 39.2 in February. If that number doesn't mean much to you, here's the headline: The S&P 500 has only posted a CAPE ratio this high in the lead-up to the dot-com crash of 2000. The S&P 500 lost 49% of its value over the next two-and-a-half years.”
 
S&P 500 Shiller CAPE Ratio
Chart and story at…
My cmt: The headline is scary and intended to get clicks.  The CAPE was nearly 50 preceding the Dotcom crash. That would imply another 20% gain is possible just from PE expansion. It doesn’t guarantee it of course; a crash from lower levels is possible. The article also states, “At current CAPE levels, Shiller's research implies forward annual returns of just 2%...” That assumes a crash that would yield a gain of only 2% over 10-years. I don’t see signs of a crash now.
 
ISM NON-MANUFACTURING (ISM)
"The Supplier Deliveries Index registered 56.2 percent, 2.3 percentage points higher than the 53.9 percent recorded in February. This is the 16th consecutive month that the index has been in expansion territory, indicating slower supplier delivery performance. (Supplier Deliveries is the only ISM® PMI® Reports index that is inversed; a reading of above 50 percent indicates slower deliveries, which is typical as the economy improves and customer demand increases.)… Continuing strength in business activity, new orders and backlog of orders are positive economic signals, so the Employment Index dropping to its lowest level since December 2023 (43.5 percent) was a surprise.” Press release at…
 
PAYROLL REPORT / UNEMPLOYMENT RATE (CNBC-Friday)
“Nonfarm payrolls rose a seasonally adjusted 178,000 during the month, a reversal from the 133,000 decline in February… The unemployment rate edged lower to 4.3%, though that was largely from a sharp reduction in the labor force.” Story at…
 
QUICK MARKET SUMMARY
-Monday the S&P 500 rose about 0.4% to 6612.
-VIX rose about 2.3% to 24.42. (Options Players aren’t all that sanguine.)
-The yield on the 10-year Treasury rose to 4.333% (compared to about this time prior market day).
 
MY TRADING POSITIONS
SPY – Added 12/1/2025.
NVDA – Added 12/1/2025 & 2/6/2026
“Despite all the bearish noise, Goldman Sachs isn’t backing down on Nvidia (NVDA) stock yet. After another stellar GTC showing, the bank reiterated its $250 price target and maintained a buy rating, underscoring confidence in the AI giant’s tremendous upside from current levels.” Story at…  
 
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
S&P 500 drop from the Top: 5.3% (Max drop=9.1%)
S&P 500 % above 200-dMA: -0.5%
Trading Days since top: 57. (Avg top to bottom for corrections less than 10% = 32 days, but the 10% correction in Sept of 2023 lasted 64-days top to bottom.)
 
The daily, bull-bear spread of 50-indicators improved from +1 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 continued higher, also a BULLISH sign.
 
I have been waiting for confirmation of the low that my system called on 20 March. The S&P 500 was down 7% at the time. It dropped another 2% to a low on 30 March.  Since then, we haven’t gotten much of a confirmation, but signs are looking good. Indicators have sharply rebounded on the above chart. Breadth has been improving for the last 5-sessions.
 
There are still some concerns: The S&P 500 is 0.6% below its 200-dMA and today’s volume was very low. We often hear a TV business-commentator state that a bounce is questionable due to low volume after a bottom.  I am used to seeing low volume after a bottom is made, since investors often don’t believe a low is in; but today’s number was very low. Total volume on the NYSE was about a third below the monthly average so there is investor confusion about what may be coming in the Middle East.
 
I’d still feel better if the Index would climb above its 200-day moving average, but the bottom appears to be in. It is possible we could see a re-test of the low, but that probably depends on the news.
 
I am still fully invested at 55% stocks in the portfolio, although I have a 20% cash position since I took some profits near the top. 50% in stocks is a good conservative position for a retiree. I don’t feel bad about having a high cash position since it is earning around 3.5%. Even though I think the bottom is in, I’m not rushing to add to stocks. As a retiree, return of investments is more important than return on investments.
 
BOTTOM LINE
I’d like to see the S&P 500 climb above its 200-dMA, but I may still begin to add to stocks soon if indicators continue to improve.
 
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…
MONDAY MARKET INTERNALS (NYSE DATA)
My basket of Market Internals improved to BUY. (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 55% 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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