“Trade what you see; not what you think.” – The Old Fool,
Richard McCranie, trader extraordinaire.
"A majority of the twelve Federal Reserve Districts
reported little or no change in economic activity since the prior Beige Book
period. Of the four Districts that differed, three reported modest growth and
one reported a moderate decline. Consumers delivered some seasonal relief over
the holidays by meeting expectations in most Districts and by exceeding
expectations in three Districts, including in New York, which noted strong
holiday spending on apparel, toys, and sporting goods. In addition, seasonal
demand lifted airfreight volume from ecommerce in Richmond and credit card
lending in Philadelphia.” Press release at...
https://www.federalreserve.gov/monetarypolicy/beigebook202401-summary.htm
MARKET REPORT / ANALYSIS
-Wednesday the S&P 500 declined about 0.6% to 4739.
-VIX rose about 7% to 144.79.
-The yield on the 10-year Treasury rose to 4.106
PULLBACK DATA:
-Drop from Top: 1.2%. 25.4% max (on a closing basis).
-Trading Days since All-Time Top: 511-days. (The top was
3 January 2022.)
The S&P 500 is 7.8% ABOVE its 200-dMA and 2.6% ABOVE
its 50-dMA.
*I won’t call the correction over until the S&P 500
makes a new all-time-high; however, the major bear-market bottom of the 25%
decline was in the 3600 area and we called a buy on 4 October 2022.
MY TRADING POSITIONS:
XLK – Technology ETF (holding since the October 2022
lows).
XLY – SOLD 1/17/2023 I’ll probably replace it with IBB
(Biotech ETF) when it looks like this pullback is over.
INTC – Added 12/6/2023.
BA – Added 12/6/2023. I plan to hold Boeing for the
time being. Could it get any worse for them?
DWCPF - Dow Jones U.S. Completion Total Stock Market
Index. – Added 12/7/2023. This is a large position in my retirement account
betting on Small Caps.
TODAY’S COMMENT:
I sold my position in XLY, Consumer Discretionary ETF
today. I continue to hold DWCPF - Dow
Jones U.S. Completion Total Stock Market Index (It is similar to the Russell
2000.) in my 401k. I still expect it to outperform when this pullback is over.
Once again, there was only 14% up-volume today – very weak
action.
The Bollinger Squeeze is still going on. A squeeze
precedes a big breakout either up or down. Since the S&P 500 is very close
to its upper Bollinger Band, I expect the breakout to be down.
The daily spread of 20 Indicators (Bulls minus Bears) declined
from -11 to -12 (a positive number is bullish; negatives are bearish); the
10-day smoothed sum that smooths the daily fluctuations declined from -42
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 HOLD: PRICE, VIX, VOLUME & SENTIMENT are neutral.
(One warning: The Long-Term Indicator is not a good
top-indicator. It can signal BUY at a top.)
(The important major BUY in this indicator was on 21
October 2022, 7-days after the bear-market bottom. For my NTSM overall signal,
I suggested that a short-term buying opportunity occurred on 27 September
(based on improved market internals on the retest), although without market
follow-thru, I was unwilling to call a buy; however, I did close shorts and
increased stock holdings. I issued a Buy-Signal on 4 October, 6-days before the
final bottom, based on stronger market action that confirmed the market
internals signal. The NTSM sell-signal was issued 21 December, 9 sessions
before the high of this recent bear market, based on the bearish “Friday Rundown”
of indicators.)
BOTTOM LINE
I don’t try to time the market for small, short-term
pullbacks so I remain bullish. Indicators are not overly bearish so I expect a
routine pullback to the lower trend-line. A decline of about 2-3% from Wednesday’s
close would be perfectly normal. That opinion would change if indicators
deteriorate.
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)
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 SELL. (My basket of Market
Internals is 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 65% stocks, including stock mutual funds and ETFs. I’m
usually about 50% invested in stocks. I’m “over invested” now expecting new,
all-time highs sooner rather than later.
I have about 25% of the portfolio in bonds.
I trade about 15-20% of the total portfolio using the
momentum-based analysis I provide here. When I see a definitive bottom, I add a
lot more stocks to the portfolio using an S&P 500 ETF as I did back in
October.
