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Wednesday, December 21, 2022

Consumer Confidence ... Home Sales ... Crude Inventories ... Best DOW Stocks ... Best ETFs … Stock Market Analysis ...

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

“I don’t think that anything can save Donald Trump...He’s decidedly on the path to irrelevance. He reduces himself by the day...This time is different...Now Donald Trump is old, predictable, obviously petty.” - Carlos Curbelo, Republican Congressman.

“It is better to be silent than to dispute with the ignorant.” - Pythagoras

“Winter Storm Elliott? Blizzard? Bomb cyclone? What happened to calling it 'weather'?” – USA Today.
(Panic sells.)

“On Monday, the Jan. 6 committee made history by approving a criminal referral for former President Donald Trump...Section 3 of the 14th Amendment makes it clear that no individual who engages in insurrection or rebellion against the Constitution after having previously sworn an oath to support it can hold any federal or state office...the standard of proof for a criminal conviction is so high, it’s hard to imagine that courts and other decision-makers would not find sufficient evidence for disqualification, for which the standard of proof is lower. In fact, the committee’s determination that sufficient evidence existed to approve the referral of criminal insurrection charges gives me a high degree of confidence that the conditions for the disqualification clause have been met.” – Noah Bookbinder, Executive director of Citizens for Responsibility and Ethics in Washington.
(I doubt the disqualification clause has been met, but we’ll see. It’s interesting though. Each state can decide whether to certify Trump to be on their ballot. No matter what happens, it looks like the lawyers will be busy.)

Political commentary at...

https://michaelpramirez.com/index.html

CONSUMER CONFIDENCE (Conference Board)
“The Conference Board Consumer Confidence Index® increased in December following back-to-back monthly declines. The Index now stands at 108.3 (1985=100), up sharply from 101.4 in November... “The Present Situation and Expectations Indexes improved due to consumers’ more favorable view regarding the economy and jobs. Inflation expectations retreated in December to their lowest level since September 2021..” Press release at...
https://www.conference-board.org/topics/consumer-confidence

EXISTING HOME SALES (CNBC)
“Sales of existing homes fell 7.7% in November compared with October, according to the National Association of Realtors. The seasonally adjusted annualized pace was 4.09 million units. That is weaker than the 4.17 million units housing analysts had predicted, and it was a much deeper fall than usual monthly declines.” Story at...
https://www.cnbc.com/2022/12/21/home-sales-tumbled-november.html

EIA CRUDE INVENTORIES (EIA)
“U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 5.9 million barrels from the previous week. At 418.2 million barrels, U.S. crude oil inventories are about 7% below the five year average for this time of year.” Report at...
https://ir.eia.gov/wpsr/wpsrsummary.pdf

MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 rose about 1.5% to 3878. (Of course it did – I sold some stock yesterday.)
-VIX fell about 7% to 20.06,
-The yield on the 10-year Treasury slipped to 3.677%.

PULLBACK DATA:
-Drop from Top: 19.1% as of today. 25.4% max (on a closing basis).
-Trading Days since Top: 244-days.
The S&P 500 is 3.6% BELOW its 200-dMA & at 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 in the 3600 area.

MY TRADING POSITIONS:
I am doing less trading now. You may do better watching the momentum charts rather than my moves.

XLK – Technology ETF

TODAY’S COMMENT:
Yesterday I wrote, that since the S&P 500 broke below its 50-dMA, it seemed likely that markets will fall at least another 5% (to the October lows). So today, Wednesday, just to confuse the issue, the S&P 500 closed essentially at its 50-dMA. (0.03% above the 50-day, but who’s counting.)

That’s the key level. If the index can climb above its 50-dMA and stay there for consecutive closes, I might be enticed to up stock holdings. On the other hand, a failure now would be bearish.

A couple of bearish signs:
-Breadth is again failing to confirm a rally at this time. In fact, my comparison of the % of stocks advancing on the NYSE vs. the S&P 500 switched back to “sell” today.
-My Money Trend indicator is headed down.
-Smart Money is drifting down.

RSI is no longer giving an oversold indication; that’s neutral but it was bullish yesterday.

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 +74 to 76. (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 HOLD: SENTIMENT is neutral; VIX & PRICE are bullish; VOLUME is negative.

Bottom line: I’m a reluctant Bear at this point. I think there is a rally coming in the near term, but my indicators were bearish last Friday. As a result, I am defensively positioned in the markets, but not drastically so.

I’m now have about 40% of the portfolio invested in stocks. (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.
*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:

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 remained NEUTRAL. (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 40% stocks, including stock mutual funds and ETFs. I’m usually about 50% invested in stocks. Last week’s indicator some was bad enough to convince me to take a more conservative view of the markets.

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.

Tuesday, December 20, 2022

NAHB Housing Market ... Best DOW Stocks ... Best ETFs … Stock Market Analysis ...

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

“The entire nation knows who is responsible for that day [6 January]. Beyond that, I don’t have any immediate observations.” - Mitch McConnell, Republican Senate Minority Leader regarding the House committee referring Trump to DOJ for prosecution. .

HOUSING STARTS / BUILDING PERMITS (Yahoo Finance)
“U.S. single-family homebuilding tumbled to a 2-1/2-year low in November and permits for future construction plunged as higher mortgage rates continued to depress housing market activity.”
https://finance.yahoo.com/news/u-single-family-housing-starts-134923583.html

MARKET REPORT / ANALYSIS
-Tuesday the S&P 500 rose about 0.1% to 3822.
-VIX fell about 4% to 21.45,
-The yield on the 10-year Treasury rose to 3.692%.

PULLBACK DATA:
-Drop from Top: 20.3% as of today. 25.4% max (on a closing basis).
-Trading Days since Top: 243-days.
The S&P 500 is 5% BELOW its 200-dMA & 1.3% 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 in the 3600 area.

MY TRADING POSITIONS:
I am doing less trading now. You may do better watching the momentum charts rather than my moves.

XLK – Technology ETF

SOLD
Some of my SPY position in the 401k.

TODAY’S COMMENT:
Since the S&P 500 broke below its 50-dMA, it seems likely that markets will fall at least another 5% (to the October lows). I suspect that the prior low will hold. The worry is that if I am wrong, markets may fall a lot farther than the prior low of 3777.

On the other hand, there are a few good signs developing: Indicators are starting to suggest a bottom: RSI is oversold today, Tuesday. Bollinger Bands are not oversold yet. I work these indicators together so I don’t have a buy signal, but it may be getting closer. Maybe I was too hasty selling more stocks today? Perhaps, but its about risk for me. I’l jump back in if markets shake-off the recent weakness. The bullish possibility is that a Santa Clause rally would carry the index higher; my suspicion is that such a rally would be short lived. We won’t have another Fed meeting until the end of January so it won’t be Fed news that drives the markets for a while.

Today, the daily sum of 20 Indicators improved from +3 to +6 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations declined from +79 to 74. (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 HOLD: SENTIMENT is neutral; VIX & PRICE are bullish; VOLUME is negative.

Bottom line: The S&P 500 is only 5% above its October low. Based on previous tests in June and October, the October low (3577) is likely to hold (more or less) even if the Index does fall that low. That optimism may not remain if the Fed continues hiking and markets look shaky now due to earnings worries.

I’m a reluctant Bear at this point.

I’m now have about 40% of the portfolio invested in stocks. (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:

My basket of Market Internals improved to NEUTRAL. (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 40% stocks, including stock mutual funds and ETFs. I’m usually about 50% invested in stocks. Last week’s indicator some was bad enough to convince me to take a more conservative view of the markets.

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.

CUTTING STOCK HOLDINGS

Given that it appears the markets will revisit the October lows, I am reducing stock holdings to around 40% invested in stocks. This is a risk limiting move since I could be wrong about the October low; markets could fall below prior lows.

Monday, December 19, 2022

NAHB Housing Market ... Best DOW Stocks ... Best ETFs … Stock Market Analysis ...

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

NAHB HOUSING MARKET INDEX (CNBC)
“Homebuilders were less confident about their business in December, but they are starting to see potential green shoots. Builder sentiment in the single-family housing market dropped 2 points to 31 in December on the National Association of Home Builders/Wells Fargo Housing Market Index. Anything below 50 is considered negative.” Story at...
https://www.cnbc.com/2022/12/19/homebuilder-sentiment-falls-bottom-may-be-near.html

MARKET REPORT / ANALYSIS
-Monday the S&P 500 fell about 0.9% to 3818.
-VIX went against trend and slipped about 0.9% to 22.42,
-The yield on the 10-year Treasury rose to 3.601%.

PULLBACK DATA:
-Drop from Top: 20.4% as of today. 25.4% max (on a closing basis).
-Trading Days since Top: 242-days.
The S&P 500 is 5.1% BELOW its 200-dMA & 1.3% 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 in the 3600 area and I am fully invested with a higher percentage of stocks than normal.

MY TRADING POSITIONS:
I am doing less trading now. You may do better watching the momentum charts rather than my moves.

XLK – Technology ETF

SOLD
QLD – 2x Nas 100

CVX – (I sold newly acquired shares {last-in, first-out}. I already owned a small position in CVX that I kept.)
DDM – 2x Dow 30.
XLI – Industrial ETF

TODAY’S COMMENT:
Monday, the S&P 500 closed 1.3% below its 50-dMA to make 2 consecutive closes below a trend line; officially, that’s a trend break.

Today, the daily sum of 20 Indicators improved from +1 to +3 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations declined from +92 to 79. (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 HOLD: SENTIMENT is neutral; VIX & PRICE are bullish; VOLUME is negative.

Bottom line: Not much change in the indicators. I sold QLD. A leveraged position is not one to hold in a downturn. The indicators are suggesting a retreat to the October lows is much more likely. The S&P 500 is only 5% above its October low. Based on previous tests in June and October, the October low (3577) is likely to hold (more or less) even if the Index does fall that low. That optimism may not remain if the Fed continues hiking.

I’m a reluctant Bear at this point, but I remain fully invested (in my retiree conservative position) since I suspect the previous low won't be violated by too much.

I’m now invested with about 55% of the portfolio invested in stocks. (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:

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

MONDAY 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 55% stocks, including stock mutual funds and ETFs. I’m usually about 50% invested in stocks. I was around 75% in stocks before this latest downturn.

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, December 16, 2022

Composite PMI ... Best DOW Stocks ... Best ETFs … Stock Market Analysis ...

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

“Good judgment comes from experience, and most of that comes from bad judgment.” – Hillbilly Wisdom.

S&P 500 GLOBAL (IHS MARKIT) US COMPOSITE PMI (S&P Global)
“US private sector firms signaled a further decline in output during December, according to latest ‘flash’ PMI™ data from S&P Global. The downturn gathered pace, as business activity fell at the joint-sharpest rate since May 2020. Manufacturers and service providers alike registered steeper decreases in output, as weaker demand conditions, inflation and hikes in interest rates dampened activity levels. The headline Flash US PMI Composite Output Index registered 44.6 in December, down from 46.4 in November, to signal the joint-fastest decline in business activity for over two-and-a-half years...” Press release at...
https://www.pmi.spglobal.com/Public/Home/PressRelease/2449edd6ab0a49b9bd0103ecc24a28b3

MARKET REPORT / ANALYSIS
-Friday the S&P 500 fell about 1.1% to 3852. (That seemed like good news – the markets were down a lot more mid-day.)
-VIX went against trend and slipped about 1% to 22.62,
-The yield on the 10-year Treasury rose to 3.489%.

PULLBACK DATA:
-Drop from Top: 19.7% as of today. 25.4% max (on a closing basis).
-Trading Days since Top: 241-days.
The S&P 500 is 4.3% BELOW its 200-dMA & 0.3% 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 in the 3600 area and I am fully invested with a higher percentage of stocks than normal.

MY TRADING POSITIONS:
I am doing less trading now. You may do better watching the momentum charts rather than my moves.

QLD – 2x Nas 100
XLK – Technology ETF

SOLD
CVX – (I sold newly acquired shares {last-in, first-out}. I already owned a small position in CVX that I kept.)
DDM – 2x Dow 30.
XLI – Industrial ETF

TODAY’S COMMENT:
The S&P 500 closed 0.3% below its 50-dMA – another close there would be more bearish. For a trend break, I like to see 2 consecutive closes below a trend line, so we’ll see what happens next week.

I can draw new trend lines around the S&P 500 based on recent market action; it now looks more like the Index is on, or slightly below its lower trend line now. That makes sense since the lower trend line is usually close to the 50-dMA.

On Fridays, I summarize a number of indicators to get a weekly feel for trend. The Friday rundown of indicators shifted from neutral to outright bearish (16-bear and 6-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
-The 50-dMA percentage of issues advancing on the NYSE (Breadth) is above 50%.
-Bollinger Bands are oversold.
-Long-term new-high/new-low data.
-There have only been 7 up-days over the last 20 sessions – bullish.
-On average, the size of up-moves has been larger than the size of down-moves over the last month.
-VIX indicator.

NEUTRAL
-The 50-dMA percentage of issues advancing on the NYSE (Breadth) has been above 50%, for 3 days in a row ending the “correction-now” signal.
-RSI
-The short-term, 10-day, Fosback Hi-Low Logic Index.
-The longer-term, 50-dEMA, Fosback Hi-Low Logic Index is neutral.
- 90% up-volume days – the last one was down - neutral.
-XLI is outperforming the S&P 500, but the outperformance is dropping so let’s call this neutral.
-Overbought/Oversold Index (Advance/Decline Ratio).
-There have been 3 Distribution Days since the last follow0thru day, but 3 is not enough to send a signal.
-There have been 3 Statistically-Significant days (big moves in price-volume) in the last 15-days.
-Sentiment.
-There have been 3 up-days over the last 10 sessions – neutral.
-The Calm-before-the-Storm/Panic Indicator flashed a panic-buying signal 10 November - expired.
-The S&P 500 is 4.3% below its 200-dMA. (Bull indicator is 12% below the 200-day, although this is based on “normal” pullbacks.)
-There was an Inverse Zweig Breadth Collapse (negative Breadth Thrust) 21 June. That’s a rare, very-bearish sign, but it was a long time ago - expired.
-There was a Hindenburg Omen signal 8 April – expired.
-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 2022. (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
-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 on 14 October. That’s a solid bottom sign at a retest. – Expired.
-13 & 21 Oct were Bullish Outside Reversal Days with no Bearish Outside Reversal days since then - expired.
-The Smart Money (late-day action) is neutral.

BEAR SIGNS
-The 10-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%
-MACD of the percentage of issues advancing on the NYSE (breadth) made a bearish crossover 15 Dec.
-The smoothed advancing volume on the NYSE is falling.
-Issues advancing on the NYSE (Breadth) compared to the S&P 500 remains bearish.
-MACD of S&P 500 price made a bearish crossover 6 Dec.
-My Money Trend indicator is falling.
-Short-term new-high/new-low data.
-Slope of the 40-dMA of New-highs is falling.
-McClellan Oscillator.
-The graph of the 100-day Count (the 100-day sum of up-days) is falling sharply.
-The 5-10-20 Timer System is SELL; the 5-dEMA and 10-dEMA are both below the 20-dEMA.
-The 5-day EMA is ~~above~~ below the 10-day EMA so short-term momentum is bearish.
-Smoothed Buying Pressure minus Selling Pressure is falling.
-S&P 500 is underperforming the Utilities (XLU).
-Only 33% 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 16 bear-sign and 6-Bull. Last week, there were 10 bear-sign and 12 bull-signs.

Friday-indicators dropped from neutral last week, to bearish this week. 2 weeks ago, indicators were extremely bullish.

Today, the daily sum of 20 Indicators remained +1 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations declined from +112 to 92. (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 HOLD: SENTIMENT is neutral; VIX & PRICE are bullish; VOLUME is negative.

Bottom line: Given the deterioration in the indicators I took profits in DDM (2x Dow) & XLI (Industrials). I sold newly acquired CVX shares (Chevron) too, but that was partly to take profits and prepare to shift to a better momentum stock. Mostly though, I am reducing risk. The indicators are suggesting a retreat to the October lows is much more likely. Based on previous tests in June and October, the October low is likely to hold (more or less) even if the Index does fall that low. That optimism may not remain if the Fed continues hiking. I’ll sell tech holdings early next week if weakness continues.

I’m a reluctant Bear at this point. Indicators are pointing down, but I think the markets may bounce higher next week. When there is conflict between what you think and what you see (in the indictors), take the indicators.

As previously noted, I think the bottom was 3577 on 12 October. There is always the possibility that the markets could retest those lows, but it seems unlikely that a retest will occur in 2022, although the recent market action is shaking my confidence in that call.

I’m now invested with about 55% of the portfolio invested in stocks. (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:

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 55% stocks, including stock mutual funds and ETFs. I’m usually about 50% invested in stocks. I’ll cut back more on stocks if we see more weakness.

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.

SOLD DDM

Took profits in DDM (2x DOW) just now. I'll hold QLD since markets are recovering. I'll watch it next week.

Thursday, December 15, 2022

Retail Sales ... Jobless Claims ... Philadelphia Fed Index ... Industrial Production ... Best DOW Stocks ... Best ETFs … Stock Market Analysis ...

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

“’I have no doubt there will be more people bolting from stocks tomorrow morning [Thursday], believing they’ve been given a tremendous opportunity to get out well ahead of when things accelerate to the downside. I think they’re being too frantic...If Powell felt that things weren’t going his way...what he would’ve done is hit us with another 75 basis point rate hike, not a 50. He didn’t do that because he knows we’re making progress.” – Jim Cramer, CNBC Contributor

RETAIL SALES (CNN)
“US retail sales fell sharply at the start of the holiday shopping season, dropping by 0.6% during the month of November, according to data released Thursday by the Commerce Department. Pullbacks in auto sales helped drive the decline — the largest monthly decrease seen all year — but even excluding autos, monthly sales declined by 0.2%, despite cooling inflation.”
https://www.cnn.com/2022/12/15/economy/us-retail-sales-november/index.html
This was a larger than expected drop in sales.

JOBLESS CLAIMS (CNN)
“The number of first-time claims for unemployment benefits fell to 211,000 for the week ended December 10, according to data released Thursday by the Department of Labor. That’s a drop of 20,000 from the previous week’s total, which was upwardly revised to 231,000; and the lowest level since September.” Story at...
https://www.cnn.com/2022/12/15/economy/jobless-claims-december/index.html
Expectations were for about 20,000 more claims. Good news is bad news as the FED’s rate hikes are not yet affecting the job market. Jobs are a lagging indicator.

PHILADLPHIA FED INDEX (RTT News)
“Philadelphia-area manufacturing activity contracted at a slower rate in the month of December, according to a report released by the Federal Reserve Bank of Philadelphia on Thursday. The Philly Fed said its diffusion index for current activity rose to a negative 13.8 in December from a negative 19.4 in November, although a negative reading still indicates a contraction.” Story at...
https://www.rttnews.com/3332382/philly-fed-index-remains-negative-for-fourth-straight-month-in-december.aspx

EMPIRE STATE MANUFACTURING Advisor Perspectives)
“Business activity declined in New York State, according to firms responding to the December 2022 Empire State Manufacturing Survey. The headline general business conditions index fell sixteen points to -11.2.” Commentary at...
https://www.advisorperspectives.com/dshort/commentaries/2022/12/15/empire-state-mfg-survey-activity-declined-in-december

INDUSTRIAL PRODUCTION (Seeking Alpha)
“Total industrial production decreased by 0.2 percent in November, after declining by 0.1 percent in October. Total industrial production is down in five of the last seven months. Over the past year, total industrial output is up 2.5 percent.” Story at...
https://seekingalpha.com/article/4564732-manufacturing-sector-declines-in-november

MARKET REPORT / ANALYSIS
-Thursday the S&P 500 fell about 2.5% to 3896.
-VIX rose about 8% to 22.83, but I would have expected it to be higher gven the big drop in the S&P 500.
-The yield on the 10-year Treasury dropped to 3.448%.

PULLBACK DATA:
-Drop from Top: 18.8% as of today. 25.4% max (on a closing basis).
-Trading Days since Top: 240-days.
The S&P 500 is 3.3% BELOW its 200-dMA & 0.9% ABOVE 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 in the 3600 area and I am fully invested with a higher percentage of stocks than normal.

MY TRADING POSITIONS:
I am doing less trading now. You may do better watching the momentum charts rather than my moves.

XLI – Industrial ETF (XLI still looks good to me. Nearly 10% of XLI is in Boeing and Caterpillar and they are both strong performers in the DOW momentum analysis.)
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.)

TODAY’S COMMENT:
Wednesday, unchanged volume was very high. As I’ve often said, many believe that this indicator suggests investor confusion at market turning points. In addition, the Bollinger Squeeze last week predicted a big move in the markets – today we got it, but it was down. I thought we’d see the move up, but the news trumped technicals. The FED, Retail Sales and China economic news were all disappointing.

The S&P 500 closed 0.9% above its 50-dMA – that’s a point of strong resistance so that’s a hopeful sign for the bulls. Depending on how one draws the charts for the S&P 500, the Index is either at its lower trend line or well below it, so the 50-day may be more important.

I never like to sell positions on huge down-days, because the markets usually retrace some of the down-move the next day; but I won’t wait much longer to sell my leveraged positions. If the S&P 500 closes below today’s close of 3895, it will be a definite sell signal fro me.

Today 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.

Friday’s rundown of indicators should be interesting. Let’s see what tomorrow brings.

Today, the daily sum of 20 Indicators fell from +6 to +1 (a positive number is bullish; negatives are bearish); the 10-day smoothed sum that smooths the daily fluctuations declined from +128 to 112. (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 slipped to HOLD: SENTIMENT is neutral; VIX & PRICE are bullish; VOLUME is negative.

Bottom line: I’m a cautious Bull at this point. I’ll have to cut back stock holdings if there is additional weakness.

As previously noted, I think the bottom was 3577 on 12 October. There is always the possibility that the markets could retest those lows, but it seems unlikely that a retest will occur in 2022.

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:

My basket of Market Internals remained SELL. It’s unusual to see that sort of reversal in one day.
(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.