Industrial Production … 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.
 
INDUSTRIAL PRODUCTION (IndexBox)
“Industrial production in the United States rose more than expected in the latest reading, according to Investing.com, providing a bullish signal for the US dollar. The indicator, which tracks the change in the inflation-adjusted value of output from manufacturers, mines and utilities, came in at an increase of 0.7 percent.” Story at…
https://www.indexbox.io/blog/us-industrial-production-surpasses-forecasts-lifting-dollar-outlook/
 
QUICK MARKET SUMMARY
-Friday the S&P 500 declined about 1.1% to 7659.
-VIX rose about 21% to 19.99.
-The yield on the 10-year Treasury rose slightly to 5.081% (compared to about this time most recent trading day).
 
MY TRADING POSITIONS
NVDA – Added 12/1/2025, 2/6/2026 & 8/3/2026. Reduced position 10/7/2021
XLK – Added 6/5/2026.
 
CURRENT SUMMARY OF APPROXIMATELY 50 INDICATORS:
At the close today, of the 50-Indicators I track, 13 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 +1 to -5 (5 More Bear indicators than Bull 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 higher, a BULLISH sign.
 
S&P 500 dropped 0.6% below its 50-dMA. The 50-dMA is normally the lower, trend line or close to it. Consecutive closes below the trendline (50-dMA) are considered by many to signal a trend change. In this case, the lower trendline is the lower part of a Bearish Wedge Pattern and the break lower is confirming the bearish pattern.
 
Forget what I wrote yesterday about breadth improvements. Today, breadth indicators again reversed lower, although the McClellan Oscillator did remain bullish. Another bright spot seems to be that the 10-dMA of indicator-spread continues higher and that’s a bullish sign.
 
Friday 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. Declines almost always end at, or near a statistically-significant, down-day, but I don’t currently have any bottom signals.
 
While it seems like the markets have been weak for months, the S&P 500 is only 2% below its all-time high. The Index has been nearly flat since middle of August and it is only 5% above its 200-dMA. There’s strong support at the 200-day and that normally would be a likely stopping point for this decline, if the decline continues. Unfortunately, we have already seen weak breadth at the all-time high and that suggests a greater than 10% decline.
 
I’ll be watching to see if the S&P 500 closes below its 50-dMA; that would signal a trend break and I will need to consider reducing stock holdings somewhat. The size of stock sales, if we do see the trend break, will depend on signals from other indicators.
 
BOTTOM LINE
I’m Neutral, but leaning 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…
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 declined 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 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.