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Friday, October 21, 2022

Best DOW Stocks ... Best ETFs … Stock Market Analysis ... A Rally Lasting Months ... Earnings

“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.

“For decades we disagreed with [Supreme] Court rulings when progressives held sway, but we never called the Court illegitimate. But now that the left has lost the Court as a backup legislature for its policy goals, the institution is supposedly broken. Tell us again who is the threat to democratic institutions?” – WSJ Editorial Board.

A RALLY LASTING FOR MONTHS (msn.com)
“...stocks could rally for another few months before hitting a bottom. Better-than-expected earnings this quarter are masking the pain to come for the stock market, according to Morgan Stanley's top stock picker.” Story at...
The stock market could rally for another few months as upbeat earnings mask the pain to come in 2023, Morgan Stanley's Mike Wilson says (msn.com)
My cmt: There is a possibility that the markets might get back to old highs. In any event, further declines are always possible. Timing is the issue. In 1998, there was a 20% correction that ended in August. A year and a half later the stock market fell into one of its largest declines as the dot.com bubble burst. Are declines coming this January...or 2 years from now?

FACTSET EARNINGS INSIGHT - EXCERPT (FactSet)
“On a year-over-year basis, the S&P 500 is reporting its lowest earnings growth since Q3 2020. Overall, 20% of the companies in the S&P 500 have reported actual results for Q3 2022 to date. Of these companies, 72% have reported actual EPS above estimates, which is below the 5-year average of 77% and below the 10-year average of 73%. In aggregate, companies are reporting earnings that are 2.3% above estimates, which is below the 5-year average of 8.7% and below the 10-year average of 6.5%.” Report at...
https://insight.factset.com/sp-500-earnings-season-update-october-21-2022

MARKET REPORT / ANALYSIS
-Friday the S&P 500 rose about 2.4% to 3753.
-VIX dipped about 1% to 29.69. (Not much for a 2.4% gain on the S&P 500.)
-The yield on the 10-year Treasury slipped to 4.228%.

PULLBACK DATA:
-Drop from Top: 21.8% as of today. 25.4% max (on a closing basis).
-Trading Days since Top: 199-days.
The S&P 500 is 9.2% Below its 200-dMA & 3.5% Below its 50-dMA.
*I won’t call the correction over until the S&P 500 makes a new-high; however, evidence suggests the bottom was / is in the 3600 area and I am fully invested with a higher percentage of stocks than normal.

MY TRADING POSITIONS:
XLI – Industrial ETF
QLD – 2x Nas 100
DDM – 2x Dow 30
XLK – Technology ETF

CVX – (I may hold this as a long-term position. I already owned a small position in CVX.)
SPY – S&P 500 (This is really a long-term position.)
IWM - Russell 2000. (This is really a long-term position.)

TODAY’S COMMENT:
10-dMA of Breadth (% of stocks advancing on NYSE) improved today to 48%. That needs to continue. We really need to see the 100-dMA move above 50%. That would be strong evidence of an end to the Bear Market. We’d also need to see the S&P 500 break above its 200-dMA.

There were some worrisome signs out there:
-There were few New-highs and a lot of new-lows.
-Friday, there was High unchanged volume.
-Today was a statistically significant up-day. That just means that the price-volume move exceeded my statistical parameters. Statistics show that a statistically-significant, up-day is followed by a down-day about 60% of the time. Statistically-significant, up-days almost always coincide with tops, but not all statistically-significant, up-days occur at tops. Today could be a top, but there are no top indicators warning; further, I had a buy signal less than a month ago so a top seems unlikely.

On the whole, indicators are bullish today.

On Fridays, I summarize a number of indicators to get a weekly feel for trend. The Friday rundown of indicators improved and is now bullish (10-bear and 18-bull). These indicators tend to be both long-term and short-term, so they are different than the 20 that I report on daily.

BULL SIGNS
-MACD of S&P 500 price made a bullish crossover 13 Oct.
-14 October, the 52-week, New-high/new-low ratio improved by 3.5 standard deviations. More simply, the spread between new-highs and new-lows improved by 716. That’s another solid bottom sign.
-Issues advancing on the NYSE (Breadth) compared to the S&P 500 are bullish. (Breadth is ahead of the Index.)
-There have only been 7 up-days over the last 20 sessions.
-The longer-term, 50-dEMA, Fosback Hi-Low Logic Index is Bullish.
-On average, the size of up-moves has been larger than the size of down-moves over the last month.
-21 Oct was a Bullish Outside Reversal Day.
-Cyclical Industrials (XLI-ETF) are outpacing the S&P 500.
-17 and 18 Oct were back-to-back 80%+ up-volume days.
-S&P 500 is outperforming the Utilities (XLU).
-The smoothed advancing volume on the NYSE is rising.
-Smoothed Buying Pressure minus Selling Pressure is rising. (There is a strong bullish divergence when today’s values are compared to the June lows.)
-McClellan Oscillator.
-The Smart Money (late-day action). This suggests Pros are buying.
-There was a Follow-Thru Day 21 October that cancels prior Distribution Days.
-There have been 5 Statistically-Significant days (big moves in price-volume) in the last 15-days. (The S&P 500 is comng off a bottom and all of the days have been up.)
-My Money Trend indicator turned up today.
-Short-term new-high/new-low data.

NEUTRAL
-The S&P 500 is 9.2% below its 200-dMA. (Bull indicator is 12% below the 200-day, although this is based on “normal” pullbacks.)
-Bollinger Bands.
-RSI
-There have been 4 up-days over the last 10 sessions – leaning bullish, but neutral.
-Overbought/Oversold Index (Advance/Decline Ratio).
-The short-term, 10-day, Fosback Hi-Low Logic Index.
-Sentiment.
-The Calm-before-the-Storm/Panic Indicator warned on 13 September - expired.
-There was an Inverse Zweig Breadth Collapse (negative Breadth Thrust) 21 June. That’s a rare, very-bearish sign, but it was too long ago - expired.
-There was a Hindenburg Omen signal 8 April – it was canceled when the McClellan Oscillator turned bullish.
-2.8% of all issues traded on the NYSE made new, 52-week highs when the S&P 500 made a new all-time-high, 3 January. (There is no bullish signal for this indicator.) This indicated that the advance was too narrow and a correction was likely to be >10%. – It proved correct, but is now Expired
- 51% of the 15-ETFs that I track have been up over the last 10-days.

BEAR SIGNS
-The 10-dMA percentage of issues advancing on the NYSE (Breadth) is below 50%.
-The 50-dMA percentage of issues advancing on the NYSE (Breadth) is below 50.
-The 100-dMA percentage of issues advancing on the NYSE (Breadth) is below 50%
-The 50-dMA percentage of issues advancing on the NYSE (Breadth) has been below 50%, for 3 days in a row below 50% for my “correction-now” signal. – It hardly matters now.
-Long-term new-high/new-low data.
-MACD of the percentage of issues advancing on the NYSE (breadth) made a bearish crossover 30 Aug.
-The graph of the 100-day Count (the 100-day sum of up-days) is falling.
-VIX is rising quickly.
-Slope of the 40-dMA of New-highs is falling.
-The 5-10-20 Timer System is SELL; the 5-dEMA and 10-dEMA are both below the 20-dEMA. (The 5-day is below the 10-day so short-term momentum is bearish too.)

On Friday, 21 February, 2 days after the top before the Coronavirus pullback, there were 10 bear-signs and 1 bull-sign. Now there are 10 bear-signs and 18-Bull. Last week, there were 15 bear-signs and 16 bull-signs. Friday indicators are leaning slightly to the bull side.

Today, the daily sum of 20 Indicators jumped from zero to +11 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations improved from +46 to +53. (The trend direction is more important than the actual number for the 10-day value.) These numbers sometimes change after I post the blog based on data that comes in late. Most of these 20 indicators are short-term so they tend to bounce around a lot.

LONG-TERM INDICATOR: The Long Term NTSM indicator remained to HOLD: VIX is bearish; PRICE & VOLUME are bullish; SENTIMENT is neutral.

Bottom line: I’m a Bull: I’m now invested with about 75% of the portfolio invested in stocks. (As a retiree, 50% invested in stocks is my “normal” portfolio.) 75% stocks is uber-bullish and that’s as far as I’ll go.

BEST ETFs - 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.
#1. XLE #2. ITA #3. IBB

*For additional background on the ETF ranking system see NTSM Page at…
http://navigatethestockmarket.blogspot.com/p/exchange-traded-funds-etf-ranking.html

BEST DOW STOCKS - TODAY’S MOMENTUM RANKING OF THE DOW 30 STOCKS (Ranked Daily)
DOW 30 momentum ranking follows:

#1. CVX #2. MRK #3. AMGN
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 remained SELL.
(Market Internals are a decent trend-following analysis of current market action, but should not be used alone for short term trading. They are most useful when they diverge from the Index.)

...My current invested position is about 75% stocks, including stock mutual funds and ETFs. I’m usually about 50% invested in stocks. I’ll cut back on stocks if we see serious bear signs.

I trade about 15-20% of the total portfolio using the momentum-based analysis I provide here. If I can see a definitive bottom, I’ll add a lot more stocks to the portfolio using an S&P 500 ETF.

Thursday, October 20, 2022

Best DOW Stocks ... Best ETFs … Stock Market Analysis ... Leading Economic Index ... Existing Home Sales ... Jobless Claims ... Philadelphia FED Index

“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.

LEADING ECONOMIC INDEX (Conference Board vis prnewswire)
“The Conference Board Leading Economic Index® (LEI) for the U.S. decreased by 0.4 percent in September 2022 to 115.9 (2016=100), after remaining unchanged in August. The LEI is down 2.8 percent over the six-month period between March and September 2022, a reversal from its 1.4 percent growth over the previous six months. ‘The US LEI fell again in September and its persistent downward trajectory in recent months suggests a recession is increasingly likely before yearend,’ said Ataman Ozyildirim, Senior Director, Economics, at The Conference Board.” Press release at...
https://www.prnewswire.com/news-releases/the-conference-board-leading-economic-index-lei-for-the-us-declined-in-september-301654967.html

EXISTING HOME SALES (CNBC)
“Existing homes are selling at the slowest pace since September 2012, with the exception of a brief drop at the start of the Covid 19 pandemic. Sales of previously owned homes fell 1.5% in September from August...Sales were lower by 23.8% year-over-year. Sharply higher mortgage rates are causing an abrupt slowdown in the housing market.” Story at...
https://www.cnbc.com/2022/10/20/existing-home-sales-fall-to-a-10-year-low-in-september.html

JOBLESS CLAIMS (USNews)
“The number of Americans filing first-time claims for unemployment benefits fell by 12,000 last week, the Labor Department reported on Thursday. Claims totaled 214,000...” Story at...
https://www.usnews.com/news/economy/articles/2022-10-20/jobless-claims-fell-last-week

PHILADELPHIA FED INDEX (ShareCast)
“Manufacturing production in the Philadelphia region deteriorated more than expected in October, according to a survey released on Thursday. The Philadelphia Fed index for current manufacturing activity edged up one point to -8.7, coming in below expectations for a reading of -5.0.” Story at...
https://www.sharecast.com/news/international-economic/philly-fed-index-ticks-up-but-remains-negative--11069240.html

MARKET REPORT / ANALYSIS
-Thursday the S&P 500 dipped about 0.8% to 3666.
-VIX bucked the trend and dipped about 2.5% to 29.98.
-The yield on the 10-year Treasury rose to 4.232%.

PULLBACK DATA:
-Drop from Top: 23.6% as of today. 25.4% max (on a closing basis).
-Trading Days since Top: 199-days.
The S&P 500 is 11.4% Below its 200-dMA & 5.9% Below its 50-dMA.
*I won’t call the correction over until the S&P 500 makes a new-high; however, evidence suggests the bottom was / is in the 3600 area and I am fully invested with a higher percentage of stocks than normal.

MY TRADING POSITIONS:
XLI – Industrial ETF
QLD – 2x Nas 100
DDM – 2x Dow 30
XLK – Technology ETF

CVX – (I may hold this as a long-term position. I already owned a small position in CVX.)
SPY – S&P 500 (This is really a long-term position.)
IWM - Russell 2000. (This is really a long-term position.)

TODAY’S COMMENT:
As I noted yesterday, the 10-dMA of Breadth is not recovering so it appears that markets may retest prior lows, once again.

Earlier today indicators were very bullish; that changed around mid-day as the markets fell in the afternoon. Utilities (XLU-ETF) are being sold. Are the pros playing us? Are they pushing the markets down; selling safe haven stocks (like utilities); and planning to buy the high flyers (tech, etc.) after the market falls a few more percent? I am not normally a conspiracy theorist; it’s just that it is very unusual to see utilities sold (down more than 2.5%), the VIX fall, while markets drop nearly 1 percent.

Here is the “S&P 500 Minus Utilities” spread presented in a graph. The red curve is the spread; a rising red curve is bullish, especially when combined with a high value.

Today, the daily sum of 20 Indicators dipped from +3 to zero (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations dropped from +52 to +46. (The trend direction is more important than the actual number for the 10-day value.) These numbers sometimes change after I post the blog based on data that comes in late. Most of these 20 indicators are short-term so they tend to bounce around a lot.

LONG-TERM INDICATOR: The Long Term NTSM indicator remained to HOLD: VIX is bearish; PRICE is bullish; VOLUME & SENTIMENT are neutral.

Bottom line: I’m a Bull: I’m now invested with about 75% of the portfolio invested in stocks. (As a retiree, 50% invested in stocks is my “normal” portfolio.) 75% stocks is uber-bullish and that’s as far as I’ll go.

BEST ETFs - 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.
#1. XLE #2. IBB #3. ITA

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

THURSDAY MARKET INTERNALS (NYSE DATA)

...My current invested position is about 75% stocks, including stock mutual funds and ETFs. I’m usually about 50% invested in stocks. I’ll cut back on stocks if we see serious bear signs and I may be forced to sell leveraged long positions if the markets keep falling.

I trade about 15-20% of the total portfolio using the momentum-based analysis I provide here. If I can see a definitive bottom, I’ll add a lot more stocks to the portfolio using an S&P 500 ETF.

Wednesday, October 19, 2022

Best DOW Stocks ... Best ETFs … Stock Market Analysis ... FED Beige Book ... Housing ... EIA Crude Inventories

“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.

FED BEIGE BOOK (nasdaq.com)
“Economic activity in the U.S. has expanded modestly since early September, according to the Federal Reserve's Beige Book, although the report noted conditions varied across industries and districts. The Beige Book, a compilation of anecdotal evidence on economic conditions in each of the twelve Fed districts, said four districts saw flat activity and two cited declines, with slowing or weak demand attributed to higher interest rates, inflation, and supply disruptions.”
https://www.nasdaq.com/articles/feds-beige-book-says-u.s.-economy-expanded-modestly-notes-some-easing-of-price-growth

HOUSING STARTS / BUILDING PERMITS (HW Media)
“As mortgage rates rose to nearly 7% and builder sentiment dipped to painfully low levels in September, housing starts also declined, dropping 8.1% from August... multifamily building permits were issued at a seasonally adjusted annual rate of 644,000, up 8.2% month over month and 25.5% year over year. Meanwhile, single-family building permits were issued at a rate of 872,000, down 3.1% from August and 17.3% from a year ago.” Story at...
https://www.housingwire.com/articles/housing-starts-slide-but-there-are-reasons-for-optimism/

EIA CRUDE INVENTORIES (EIA)
“U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 1.7 million barrels from the previous week. At 437.4 million barrels, U.S. crude oil inventories are about 2% below the five year average for this time of year.” Report at...
https://ir.eia.gov/wpsr/wpsrsummary.pdf

OPPENHEIMER BULLISH ON EQUITIES (CNBC)
“Those looking for positive signs will be glad to hear Oppenheimer’s Chief Investment Strategist John Stoltzfus' take on the matter.
‘Our view remains bullish on equities as the stocks of many solid companies look grossly oversold as a result of extreme negativity that is evidenced in polls of investment professionals and private investors and in the day to day volatility in the markets,’ Stoltzfus said.” Story at...
https://finance.yahoo.com/news/remain-bullish-equities-many-solid-231406804.html
My cmt: I’m glad someone agrees with me.

SUPREME COURT TO BLOCK BIDEN TRILLION DOLLAR STUDENT LOAN GIVE AWAY? (CNBC)
“The Supreme Court on Wednesday was asked to block the Biden administration’s student loan debt relief program, which is set to take effect this weekend. The Brown County Taxpayers Association, a Wisconsin group, directed the emergency application to delay implementation of the debt relief plan to Justice Amy Coney Barrett, who is responsible for handling such requests from the 7th federal appeals court circuit, which contains that state.” Story at...
https://www.cnbc.com/2022/10/19/supreme-court-asked-to-block-bidens-student-loan-forgiveness-plan.html
My cmt: The Executive Branch, including the President, does not have the authority under the Constitution to unilaterally cancel debts owed to the US. That is the purview of Congress. This just continues a long line of Presidents who have tried to usurp Congressional powers. The sad thing is that Congress has lacked the honesty to challenge the President, because in recent cases, Congress has been held by the same political party as the President. Biden’s illegal actions are no different from when Trump illegally diverted funds to build the Border Wall, although Congress did eventually fund the wall. For more, see here...
https://jonathanturley.org/2022/09/02/college-loan-forgiveness-plan-reveals-bidens-constitutional-cynicism/

BTW, the Wharton School of Business estimated the cost of the give-away at a Trillion dollars; NPR estimates “only” $400 billion. Could NPR be biased?????

MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 dipped about 0.7% to 3695.
-VIX rose about 0.9% to 30.76.
-The yield on the 10-year Treasury was still 4.139%.

PULLBACK DATA:
-Drop from Top: 23% as of today. 25.4% max (on a closing basis).
-Trading Days since Top: 199-days.
The S&P 500 is 10.9% Below its 200-dMA & 5.4% Below its 50-dMA.
*I won’t call the correction over until the S&P 500 makes a new-high; however, evidence suggests the bottom was / is in the 3600 area and I am fully invested with a higher percentage of stocks than normal.

MY TRADING POSITIONS:
XLI – Industrial ETF
QLD – 2x Nas 100
DDM – 2x Dow 30
XLK – Technology ETF

CVX – (I may hold this as a long-term position. I already owned a small position in CVX.)
SPY – S&P 500 (This is really a long-term position.)
IWM - Russell 2000. (This is really a long-term position.)

TODAY’S COMMENT:
While the bottom signal looked very strong on 27 September, there are concerns showing up now. When looking a other major bottoms, specifically the March 2009 retest (Financial Crisis bottom) and the Covid crash bottom in March of 2020, breath was higher than it is now.

In 2009, the percentage of stocks advancing over the 10-days prior to the retest bottom (10-day Breadth) was 50% at the bottom. During the Covid Bear market, definitely an odd correction due to its speed down and back, 10-day Breadth recovered to 56% just 3 days after the bottom. Now the 10-day breadth is languishing at 44% five trading-days after the bottom.

10-day Breadth is higher now than it was at the September lows; that’s good, but we really need to see breadth improve, or we’ll have to sweat a decline to the prior lows.

Curious that XLU (Utilities – ETF) was sold hard today. It doesn’t look like investors are that worried. If they were, they wouldn’t be selling XLU.

Today, the daily sum of 20 Indicators dipped from +4 to +3 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations dropped from +56 to +52. (The trend direction is more important than the actual number for the 10-day value.) These numbers sometimes change after I post the blog based on data that comes in late. Most of these 20 indicators are short-term so they tend to bounce around a lot.

LONG-TERM INDICATOR: The Long Term NTSM indicator remained to HOLD: VIX is bearish; PRICE & SENTIMENT are bullish; VOLUME is neutral.

Bottom line: I’m a Bull: I’m now invested with about 75% of the portfolio invested in stocks. I added a leveraged long position (QLD – 2xNas 100) and XLI (Industrial ETF) 18 Oct based on strong bullish signs. (As a retiree, 50% invested in stocks is my “normal” portfolio.) 75% stocks is uber-bullish and that’s as far as I’ll go.

BEST ETFs - 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.
#1. XLE #2. IBB #3. ITA

Tuesday, October 18, 2022

Best DOW Stocks ... Best ETFs … Stock Market Analysis ... Industrial Production ... NAHB Housing Index

“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.

INDUSTRIAL PRODUCTION (Federal Reserve)
“Industrial production increased 0.4 percent in September and 2.9 percent at an annual rate in the third quarter. In September, manufacturing output rose 0.4 percent after advancing a similar amount in the previous month.” Release at...
https://www.federalreserve.gov/releases/g17/current/default.htm

NAHB HOUSING MARKET INDEX (NAHB)

Chart from...
https://www.nahb.org/news-and-economics/housing-economics/indices/housing-market-index
“Builder sentiment fell for the ninth consecutive month in September as elevated interest rates, persistent building material supply chain disruptions, and high home prices continue to impact housing affordability, according to the NAHB.” Story at...
https://www.builderonline.com/data-analysis/nahb-wells-fargo-housing-market-index-falls-for-ninth-consecutive-month_o

MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 rose about 1.1% to 3720.
-VIX dipped about 3% to 30.5. (That’s still not much drop given the big move up in the S&P 500. The VIX crowd remains skeptical, although to be fair, a high VIX suggests big moves in price in EITHER direction.)
-The yield on the 10-year Treasury was still 4.013%.

PULLBACK DATA:
-Drop from Top: 22.4% as of today. 25.4% max (on a closing basis).
-Trading Days since Top: 199-days.
The S&P 500 is 10.4% Below its 200-dMA & 5% Below its 50-dMA.
*I won’t call the correction over until the S&P 500 makes a new-high; however, evidence suggests the bottom was / is in the 3600 area and I am fully invested with a higher percentage of stocks than normal.

MY TRADING POSITIONS:
XLI – Industrial ETF
QLD – 2x Nas 100
DDM – 2x Dow 30
XLK – Technology ETF
CVX – (I may hold this as a long-term position. I already owned a small position in CVX.)
SPY – S&P 500 (I may hold this as a long-term position.)
IWM - Russell 2000. (I may hold this as a long-term position.)

TODAY’S COMMENT:
I got the volume signal I was looking for – up-volume was 83% today. That’s a very bullish sign since it follows the 93% up-volume day yesterday. As noted earlier, “In approximately half the cases in the past 69 years, the 90% Upside Day, or the back-to-back 80% Upside Days, which signaled a major market reversal, occurred within five trading days or less of the market low.” - Identifying Bear Market Bottoms - Lowry Research. The bottom was 4 days ago. We also note that since my buy signal of 27 September, there have been four 90% up-volume days and two back-to-back 80%+ up-volume days. That’s strongly suggesting a durable rally.

Tuesday unchanged volume was high. As I’ve often said, many believe that this indicator suggests investor confusion at market turning points. My problem is that it is frequently a false signal, but I will say this; this indicator has been correct the last four times we’ve seen it. Now, I don’t know what it means. The S&P 500 is about the same level as it was when we saw the last signal, so is this signal bullish or bearish? It is odd to see a high, unchanged volume-day when 83% of volume was up-volume.

Today, the daily sum of 20 Indicators dipped from +9 to +4 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations remained +56. (The trend direction is more important than the actual number for the 10-day value.) These numbers sometimes change after I post the blog based on data that comes in late. Most of these 20 indicators are short-term so they tend to bounce around a lot.

LONG-TERM INDICATOR: The Long Term NTSM indicator remained to HOLD: VIX is bearish; PRICE & SENTIMENT are bullish; VOLUME is neutral.

Bottom line: I’m a Bull: I’m now invested with about 75% of the portfolio invested in stocks. I added a leveraged long position (QLD – 2xNas 100) and XLI (Industrial ETF) 18 Oct based on strong bullish signs. (As a retiree, 50% invested in stocks is my “normal” portfolio.) 75% stocks is uber-bullish and that’s as far as I’ll go.

BEST ETFs - 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.
#1. XLE #2. IBB #3. XLV

My basket of Market Internals slipped to SELL, but just barely.
(Market Internals are a decent trend-following analysis of current market action, but should not be used alone for short term trading. They are most useful when they diverge from the Index.)

Monday, October 17, 2022

Best DOW Stocks ... Best ETFs … Stock Market Analysis ... Empire State Manufacturing

“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.

EMPIRE STATE MANUFACTURING (Advisor Perspectives)
“Business activity declined modestly in New York State, according to firms responding to the October 2022 Empire State Manufacturing Survey. The headline general business conditions index fell eight points to -9.1.” Charts and analysis at...
https://www.advisorperspectives.com/dshort/commentaries/2022/10/17/empire-state-mfg-survey-activity-declined-in-october

NO BULLISH MESSAGE YET FROM BOND CEF A-D LINE (McClellan Financial Publications)
“As stock prices were rebounding strongly on Oct. 13 from an initial bad reaction to CPI data, there was no confirmation of that price strength from the bond-related closed end funds (CEFs) which trade on the NYSE... During the bear market of 2022, the Bond CEF A-D Line has continued to point the way lower for the stock market.”

Charts & commentary at...
https://www.mcoscillator.com/learning_center/weekly_chart/no_bullish_message_yet_from_bond_cef_a-d_line/
My cmt: This is not my view. Let’s hope this indicator flips positive soon.

MARKET REPORT / ANALYSIS
-Monday the S&P 500 rose about 2.7% to 3678.
-VIX dipped about 2% to 31.37. (That’s not much drop givven the big move up in the S&P500. The VIX crowd is skeptical.)
-The yield on the 10-year Treasury slipped to 4.013%.

PULLBACK DATA:
-Drop from Top: 23.3% as of today. 25.4% max (on a closing basis).
-Trading Days since Top: 198-days.
The S&P 500 is 11.5% Below its 200-dMA & 6.3% Below its 50-dMA.
*I won’t call the correction over until the S&P 500 makes a new-high; however, evidence suggests the bottom was/is in the 3600 area and I am fully invested with a higher percentage of stocks than normal.

MY TRADING POSITIONS:
DDM – 2x Dow 30
XLK – Technology ETF
CVX – (I may hold this as a long-term position. I already owned a small position in CVX.)
SPY – S&P 500 (I may hold this as a long-term position.)
IWM - Russell 2000. (I may hold this as a long-term position.)

TODAY’S COMMENT:
There were some more bullish signs:
-Monday was a 90% up-volume day although the close wasn’t high enough to give a strong, bull sign. I’ll look for tomorrow to see if up-volume will be greater than 80%. Back-to-back high up-volume days is a very bullish sign. BTW, that signal already occurred once, on 3 and 4 October. The Index drifted down after that signal – more back-to-back bull signs would likely signal a more durable bullish move this time.
-Junk Bond to S&P 500 spreads are positive and getting more positive.
-The smoothed version of the Buying-Pressure minus Selling-Pressure is flat and appears to be turning up. This has happened on previous rallies, but this time, the turn is occurring at a much higher level than was true at the June lows on the S&P 500. That is a bullish divergence I have mentioned previously.

Today, the daily sum of 20 Indicators remained +6 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations improved from +46 to +56. (The trend direction is more important than the actual number for the 10-day value.) These numbers sometimes change after I post the blog based on data that comes in late. Most of these 20 indicators are short-term so they tend to bounce around a lot.

LONG-TERM INDICATOR: The Long Term NTSM indicator remained to HOLD: VIX is bearish; PRICE & SENTIMENT are bullish; VOLUME is neutral.

Bottom line: I’m a Bull: I’m now invested with about 70% of the portfolio invested in stocks. I added a leveraged long position (DDM – 2xDow) 13 Oct based on strong bullish signs. (As a retiree, 50% invested in stocks is my “normal” portfolio.)

BEST ETFs - 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.
#1. XLE #2. IBB #3. XLV

*For additional background on the ETF ranking system see NTSM Page at…
http://navigatethestockmarket.blogspot.com/p/exchange-traded-funds-etf-ranking.html

BEST DOW STOCKS - TODAY’S MOMENTUM RANKING OF THE DOW 30 STOCKS (Ranked Daily)
DOW 30 momentum ranking follows:
#1. AMGN #2. CVX #3. MRK

MONDAY MARKET INTERNALS (NYSE DATA)

My basket of Market Internals remained HOLD.
(Market Internals are a decent trend-following analysis of current market action, but should not be used alone for short term trading. They are most useful when they diverge from the Index.)

...My current invested position is about 70% stocks, including stock mutual funds and ETFs. I’m usually about 50% invested in stocks. I’ll cut back on stocks if we see serious bear signs.

I trade about 15-20% of the total portfolio using the momentum-based analysis I provide here. If I can see a definitive bottom, I’ll add a lot more stocks to the portfolio using an S&P 500 ETF.

Friday, October 14, 2022

Best DOW Stocks ... Best ETFs … Stock Market Analysis ... Retail Sales ... Michigan Sentiment

“Trade what you see; not what you think.” – The Old Fool, Richard McCranie, trader extraordinaire.

“For decades we disagreed with [Supreme] Court rulings when progressives held sway, but we never called the Court illegitimate. But now that the left has lost the Court as a backup legislature for its policy goals, the institution is supposedly broken. Tell us again who is the threat to democratic institutions?” – WSJ Editorial Board.

RETAIL SALES (CNBC)
“Retail and food services sales were little changed for the month after rising 0.4% in August, according to the advance estimate from the Commerce Department. That was below the Dow Jones estimate for a 0.3% gain.” Story at...
https://www.cnbc.com/2022/10/14/retail-sales-september-2022.html

UNIV OF MICHIGAN SENTIMENT (Univ of Michigan)
“Consumer sentiment is essentially unchanged at 1.2 index points above September, in spite of a 23% improvement in current buying conditions for durables owing to an easing in supply constraints. Sentiment is now 9.8 points above the all-time low reached in June but this improvement remains tentative, as the expectations index declined by 3% from last month.” Report at...
http://www.sca.isr.umich.edu/

HERITAGE CAPITAL COMMENTARY (Heritage Capital)
“I was looking for a big down opening that was rejected and we sure got that [Thursday with wild market swings]...This is definitely not normal behavior, but this kind of action is usually seen during the bottoming process. Again, it’s a process not a point in time. And as you also know I have been crystal clear both here and in the media that midterm election years typically see major bottoms, especially in Q4 and mostly in October, when they has been a significant decline. One single day will not dictate that, but it just adds to evidence... Stock and bond market behavior in the coming days will be important. Thursday’s low must, must, must hold. We need to see the 2-Year Note stop going up and then start to back off.” - Paul Schatz, President Heritage Capital. Commentary at...
https://investfortomorrow.com/blog/bells-may-not-be-ringing-but-they-are-being-polished/

MARKET REPORT / ANALYSIS
-Friday the S&P 500 fell about 2.4% to 3583.
-VIX rose about 0.3% to 32.02.
-The yield on the 10-year Treasury rose to 4.024%.

PULLBACK DATA:
-Drop from Top: 25.3% as of today. 25.4% max (on a closing basis).
-Trading Days since Top: 196-days.
The S&P 500 is 13.9% Below its 200-dMA & 8.9% Below its 50-dMA.
*I won’t call the correction over until the S&P 500 makes a new-high; however, evidence suggests the bottom was/is in the 3600 area and I am fully invested with a higher percentage of stocks than normal.

MY TRADING POSITIONS:
DDM – 2x Dow 30

CVX – (I may hold this as a long-term position. I already owned a small position in CVX.)
SPY – S&P 500 (I may hold this as a long-term position.)
IWM - Russell 2000. (I may hold this as a long-term position.)

TODAY’S COMMENT:
I would like to have seen some follow through from Thursday’s big reversal (down in the AM and rally afterward), but the other possibility was profit taking and that’s what we got. Still, today’s low didn’t fall below yesterday’s intraday low, and that’s a positive on a bad day. We did get a strong bull sign though and it was an important one.

The 52-week, New-high/new-low spread (new-highs minus new-lows) improved by 3.5 standard deviations today. More simply, the spread between new-highs and new-lows improved by 716 today. That big of a reversal has only happened once before in this correction; generally, it tends to happen within a few days after a bottom. VIX also gave us a perspective on the day’s action.

In spite of the big down-day Friday, the VIX was essentially flat. The option crowd still seems to think there is a rally coming.

The S&P 500 tested its 12 Oct low today. Internals were not as good; that usually warns that there could be lower lows coming. The good news is that today was another successful test when compared to the June lows. The Index is definitely in a bottoming pattern. I think we’ve seen the bottom, but we’ll have to wait for more confirmation.

On Fridays, I summarize a number of indicators to get a weekly feel for trend. The Friday rundown of indicators improved, but remained slightly bullish to neutral (15-bear and 16-bull). These indicators tend to be both long-term and short-term, so they are different than the 20 that I report on daily.

Indicators have been slowly improving for the last three weeks. Details follow:

BULL SIGNS
-There was a Follow-Thru Day 13 October that canceled prior Distribution Days.
-MACD of S&P 500 price made a bullish crossover 13 Oct.
-My Money Trend indicator.
-Short-term new-high/new-low data.
-The 52-week, New-high/new-low ratio improved by 3.5 standard deviations. More simply, the spread between new-highs and new-lows improved by 716 today. That’s another solid bottom sign.
-There have been 5 Statistically-Significant days (big moves in price-volume) in the last 15-days. This can be bullish or bearish. Since the Index is at a bottom, I’ll call it bullish.
-Issues advancing on the NYSE (Breadth) compared to the S&P 500 are bullish. (Breadth is ahead of the Index.)
-The longer-term, 50-dEMA, Fosback Hi-Low Logic Index is Bullish.
-There have only been 5 up-days over the last 20 sessions.
-On average, the size of up-moves has been larger than the size of down-moves over the last month.
-13 Oct was a Bullish Outside Reversal Day.
-Cyclical Industrials (XLI-ETF) are outpacing the S&P 500.
-Sentiment.
-28 Sept and 3 and 4 Oct were all bullish 90% up-volume days. (7 Oct there was a 90% down-volume day, but the close was not within the lower 10% of the day’s range, so it won’t negate the bullish 90% up-volume day on 4 October.)
-The S&P 500 is 13.9% below its 200-dMA. (Bull indicator is 12% below the 200-day, although this is based on “normal” pullbacks.)
-S&P 500 is outperforming the Utilities (XLU).

NEUTRAL
-Bollinger Bands.
-The short-term, 10-day, Fosback Hi-Low Logic Index.
-There have been 3 up-days over the last 10 sessions – leaning bullish, but neutral.
-Overbought/Oversold Index (Advance/Decline Ratio).
-RSI
-The Calm-before-the-Storm/Panic Indicator warned on 13 September - expired.
-There was an Inverse Zweig Breadth Collapse (negative Breadth Thrust) 21 June. That’s a rare, very-bearish sign, but it was several-weeks ago - expired.
-There was a Hindenburg Omen signal 8 April – it was canceled when the McClellan Oscillator turned bullish.
-2.8% of all issues traded on the NYSE made new, 52-week highs when the S&P 500 made a new all-time-high, 3 January. (There is no bullish signal for this indicator.) This indicated that the advance was too narrow and a correction was likely to be >10%. – It proved correct, but is now Expired

BEAR SIGNS
-The 10-dMA percentage of issues advancing on the NYSE (Breadth) is below 50%.
-The 50-dMA percentage of issues advancing on the NYSE (Breadth) is below 50.
-The 100-dMA percentage of issues advancing on the NYSE (Breadth) is below 50%
-The 50-dMA percentage of issues advancing on the NYSE (Breadth) has been below 50%, for 3 days in a row below 50% for my “correction-now” signal. – It hardly matters now.
-Long-term new-high/new-low data.
-The smoothed advancing volume on the NYSE is falling.
-MACD of the percentage of issues advancing on the NYSE (breadth) made a bearish crossover 30 Aug.
-Smoothed Buying Pressure minus Selling Pressure is falling. (While it’s falling, there is a strong bullish divergence when today’s values are compared to the June lows.)
-McClellan Oscillator is negative.
-The graph of the 100-day Count (the 100-day sum of up-days) is falling.
-The Smart Money (late-day action) is headed down.
-VIX is rising quickly.
-Slope of the 40-dMA of New-highs is falling.
-The 5-10-20 Timer System is SELL; the 5-dEMA and 10-dEMA are both below the 20-dEMA. (The 5-day is below the 10-day so short-term momentum is bearish too.)
- Only 42% of the 15-ETFs that I track have been up over the last 10-days.

On Friday, 21 February, 2 days after the top before the Coronavirus pullback, there were 10 bear-signs and 1 bull-sign. Now there are 15 bear-signs and 16-Bull. Last week, there were 15 bear-signs and 11 bull-signs. Friday indicators are leaning slightly to the bull side.

Today, the daily sum of 20 Indicators improved from +6 to +9 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations improved from +35 to +46. (The trend direction is more important than the actual number for the 10-day value.) These numbers sometimes change after I post the blog based on data that comes in late. Most of these 20 indicators are short-term so they tend to bounce around a lot.

LONG-TERM INDICATOR: The Long Term NTSM indicator remained to HOLD: VIX is bearish; PRICE & SENTIMENT are bullish; VOLUME is neutral.

Bottom line: I’m a Bull: I’m now invested with about 70% of the portfolio invested in stocks. I added a leveraged long position (DDM – 2xDow) 13 Oct based on strong bullish signs. (As a retiree, 50% invested in stocks is my “normal” portfolio.)

BEST ETFs - 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.
#1. XLE #2. IBB #3. XLV