ISM Non-Manufacturing … ADP Employment … 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.
 
ADP EMPLOYMENT (ADP)
“Hiring showed solid growth for a second month and pay gains were steady. There were weak spots; professional and business services lost jobs for the third straight month. "Employers of all sizes were hiring last month, and our data suggests that job-changers were lured by a combination of bonuses, overtime, and more hours in addition to higher base pay. Taken together, earnings growth for these workers hit its fastest pace since March 2024." - Dr. Nela Richardson. Chief Economist, ADP. Press release at…
https://adpemploymentreport.com/
 
ISM NON-MANUFACTURING (ISM via PRNewswire)
“Economic activity in the services sector continued to expand in October, say the nation's purchasing and supply executives in the latest ISM^® Services PMI^® Report. The Services PMI^® registered 54.5 percent, the 28th consecutive month in expansion territory.” Press release at…
https://www.prnewswire.com/news-releases/services-pmi-at-54-5-october-2026-ism-services-pmi-report-302928112.html
 
QUICK MARKET SUMMARY
-Wednesday the S&P 500 rose about 1.6% to 7689.
-VIX dropped about 20% to 16.61.
-The yield on the 10-year Treasury declined to 4.888% (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, 10 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
Where is the S&P 500?
          - 1.5% below its all-time high
          - 0.1% above its 50-dMA
          - 1% above its 100-dMA
          - 5.2% above its 200-dMA
 
The daily, bull-bear spread of 50-indicators improved from -6 to +4 (4 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, is reversed higher, a BULLISH sign. (The 10-day had been bouncing back and forth so it’s hard to place to much faith in it.)
 
A guest commentator on CNBC (sorry I didn’t catch his name) suggested that based on prior election cycles, this relief rally may be short lived. We now have to worry about: what the Democrats will do; what will be Trump’s reaction; the Fed is in a hiking cycle with hikes expected in December and probably a few more issues.
 
I asked Google AI: “What happened to the stock market after the 2018 mid-term election?”
The answer:
- “The 2018 midterms resulted in a split Congress, with Democrats winning control of the House of Representatives and Republicans maintaining the Senate…
- On November 7, 2018, the day after the election, the S&P 500 surged 2.1% as investors reacted positively to the removal of political uncertainty and historical precedents favoring gridlock…
- The optimism was short-lived as macroeconomic pressures, particularly concerns about economic growth and monetary policy tightening, took over…
- From the end of October through December 24, 2018, the S&P 500 slid roughly 13%, culminating in a sharp Christmas Eve sell-off that marked the bottom of the correction...”
So, this rally has historical precedent and it’s not particularly good even though markets liked the election.
 
Markets like divided Government. Look what happened when Obama had power with the Democrats in charge of Congress – they passed a new expensive under-funded, un-popular healthcare system known as “Obamacare.” The Democrats were swept out of power in the mid-terms.
 
What happened with Trump when the Republicans controlled congress? Tariffs; expensive, budget busting tax-cuts; killing civilians on the high seas in the name of drug enforcement; overblown immigration enforcement and more. The Republicans were swept out of power in the mid-terms.
 
Where do we stand? Indicators are improving, but that hasn’t had a very good correlation with the S&P 500 recently. Since mid-September, Indicators have been improving, but the S&P 500 has been nearly flat to slightly higher. I am inclined to sit on current holdings until I see the Index take out the all-time high.
 
Nvidia was down more than 3% today; Micron was down 7%; Caterpillar was down 5% - the AI trade is still under pressure and that is a worry for the entire market. I have never been a fan of the “rotation” argument for stocks (i.e., rotating out of tech into other sectors).  My experience is that when leaders fail, markets fail.
 
BOTTOM LINE
I’m Neutral with a wait and see attitude.
 
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
 
WEDNESDAY 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.