ISM Manufacturing … Construction Spending … 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.
 
“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.
 
“There’s a lot of exuberance out there,” Dimon continued. “But it was in 1972, 1986, 2000, 2007. That doesn’t give me comfort.” – Jamie Dimon
 
HOUSE VOTES TO AVOID GOVT SHUTDOWN IN THE FALL (CNBC)
“The U.S. House on Tuesday voted, 370-48, in favor of a stopgap spending measure that expected to avert a government shutdown this fall ahead of the 2026 midterm election, though GOP hard-liners vowed to complicate things.” Story at…
https://www.cnbc.com/2026/09/01/congress-government-shutdown-vote.html
 
ISM MANUFACTURING (ISM)
“The Manufacturing PMI^® registered 55.6 percent in July, 2.3 percentage points above the June figure and the highest reading since May 2022 (55.9 percent). The overall economy continued in expansion for the 21st month in a row.“ Report at…
https://www.ismworld.org/supply-management-news-and-reports/reports/ism-pmi-reports/pmi/july/
 
CONSTRUCTION SPENDING (RTT News)
“Partly reflecting a steep drop in spending on residential construction, the Commerce Department released a report on Tuesday showing construction spending in the U.S. unexpectedly decreased in the month of July. The report said construction spending fell by 0.5 percent…” Story at…
https://www.rttnews.com/3687572/u-s-construction-spending-unexpectedly-falls-0-5-in-july.aspx?type=alleco
 
QUICK MARKET SUMMARY
-Tuesday the S&P 500 declined about 0.7% to 7631.
-VIX rose about 10% to 16.34.
-The yield on the 10-year Treasury rose to 4.802% (compared to about this time prior market day).
 
MY TRADING POSITIONS
QLD – Added 5/28/2026
NVDA – Added 12/1/2025, 2/6/2026 & 8/3/2026
XLK – Added 6/5/2026
 
CURRENT SUMMARY OF APPROXIMATELY 50 INDICATORS:
At the close today, of the 50-Indicators I track, 16 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 -6 to -8 (8 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) that smooths daily fluctuations continued down, a BEARISH sign.
 
Tuesday 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,
 
Bottoms almost always occur on/or near Statistically-significant, down-days, but not all statistically-significant, down-days occur at bottoms. Tuesday is not likely to have been a short-term bottom; there were no Bottom Indicators flashing “buy.”
 
The Bollinger Band Squeeze has resolved. Now the S&P 500 is very close to its lower Bollinger Band nearly giving a buy-signal for this indicator, although we rarely act on only one signal.
 
I had hoped we would see the S&P 500 break higher after the Bollinger Band Squeeze; however, I was disappointed.  The Index broke lower. This pushed the Index lower toward its 50-dMA. The S&P 500 closed 0.8% above its 50-day. That is still the most likely end for the market weakness we are experiencing. Unfortunately, the Iran conflict continues to be the gift-that-keeps-giving; now it is giving bad news that raises concerns over oil and possible inflation troubles from various commodities that transit those waters.  The S&P 500 is 7.1% above its 200-dMA. Earnings were very good so it doesn’t seem that the index will fall that far, but of course, it is possible. News trumps technicals.
 
BOTTOM LINE
I could be bearish based on indicators and market action but I’m still neutral since I think we are watching a normal retreat to the lower trend line around the 50-dMA.
 
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
 
TUESDAY 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 60% 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.