Leading Economic Indicators … Consumer Sentiment … Momentum Trading DOW Stocks & ETFs … Stock Market Analysis

 
It was a busy day Friday so I’m posting Friday’s blog Saturday.  Monday is Memorial Day, so no post Monday.
 
“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.
 
“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.
 
LEADING ECONOMIC INDEX (Conference Board) 
“The US LEI increased slightly in April, driven mainly by a rebound in stock prices and an increase in building permits, only for two and more units,” said Justyna Zabinska-La Monica, Senior Manager, Business Cycle Indicators, at The Conference Board. “The leading index rose in two of the past three months, but the gains did not offset the steep fall registered in March. As a result, the LEI’s six- and twelve-month growth rates were negative, signaling fragile economic conditions ahead… The Conference Board is currently projecting 1.7% y/y GDP growth in 2026, revised up slightly from last update of 1.6%.”
https://www.conference-board.org/topics/us-leading-indicators/
 
CONSUMER SENTIMENT (Univ of Michigan)
“Consumer sentiment fell for the third straight month as supply disruptions in the Strait of Hormuz continue to boost gasoline prices. Sentiment is now just below the previous historical trough seen in June 2022. The cost of living continues to be a first-order concern, with 57% of consumers spontaneously mentioning that high prices were eroding their personal finances, up from 50% last month. Lower-income consumers and those without college degrees posted particularly strong sentiment declines; these groups are more sensitive to increases in the cost of gas and other essentials. Independents and Republicans saw decreases in sentiment, with both groups reaching their lowest readings of the current presidential administration. Meanwhile, sentiment of Democrats was little changed from last month. Critically, consumers appear worried that inflation will increase and proliferate beyond fuel prices, even in the long run.
Year-ahead inflation expectations inched up from 4.7% last month to 4.8% this month.” Press release at… 
https://www.sca.isr.umich.edu/
 
TOM LEE – MICHIGAN SENTIMENT IS BIASED (Benzinga)
“Fundstrat Head of Research, Tom Lee criticized the University of Michigan consumer sentiment survey for what he described as partisan bias, arguing that an imbalance in respondents' political affiliations was skewing the data.” Story at…
https://www.benzinga.com/markets/macro-economic-events/26/05/52711316/fundstrats-tom-lee-torches-michigan-consumer-sentiment-survey-over-notoriously-partisan-skew-not-a-fair-breakdown
 
QUICK MARKET SUMMARY
-Friday the S&P 500 rose about 0.4% to 7473.
-VIX declined about 0.4% to 16.70.
-The yield on the 10-year Treasury declined to 4.558% (compared to about this time prior market day).
 
MY TRADING POSITIONS
NVDA – Added 12/1/2025 & 2/6/2026
“According to the 54 analysts' twelve-month price targets for NVIDIA, the average price target is $278.73. The highest price target for NVDA is $360.00, while the lowest price target for NVDA is $205.00.”- MarketBeat at… 
https://www.marketbeat.com/stocks/NASDAQ/NVDA/forecast/
5/20/26: Nvidia beats on revenue and guidance, adds $80 billion to buyback plan.
 
CURRENT SUMMARY OF APPROXIMATELY 50 INDICATORS:
At the close today, of the 50-Indicators I track, 10 gave Bear-signs and 15 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
Pullback Data:
-Days since the top: 6
-Drop from the Top: 0.4%
-% above the 50-dMA: 6.9%
-% above the 200-dMA: 9.8%
Pullback? What pullback?
 
The daily, bull-bear spread of 50-indicators improved from -4 to +5 (5 more Bull indicators than Bear indicators), a NEUTRAL 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 down, a BEARISH sign that is more important than the daily numbers.
 
The S&P 500 made a new-all-time high during mid-afternoon at 7506. At the close Friday, breadth was weak. If the S&P 500 had closed at a new-high with weak breadth it would have suggested a significant correction. Since it wasn’t at the close, I am left guessing.
 
Indicators have been improving as the S&P 500 has been rising over the last three days. It would not be unusual to see the Index make a new high only to fall back into a correction.
 
On the other hand, I was expecting a 3-5% pullback.  We got 2%. Is that enough? Doesn’t seem like it, but we’ll find out next week.
 
BOTTOM LINE
I am bearish in the short-term, still expecting a relatively small pullback... but I am much less sure of that call. There are a lot of bulls out there.
 
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
 
FRIDAY MARKET INTERNALS (NYSE DATA)

My basket of Market Internals improved 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 50% 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.