ETF Tracker Newsletter For June 2, 2023

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ETF Tracker StatSheet          

You can view the latest version here.

Bulls Run Wild After Senate Unleashes Money Printing: How Long Can It Last?

[Chart courtesy of]

  1. Moving the markets

The market soared today after the Senate cleared the way for more money printing by suspending the debt ceiling until 2025. This means the Fed and the politicians can create trillions of new dollars out of thin air, which will eventually lead to runaway inflation. Ouch!

Some of this new money will flow into the stock market, boosting the bullish mood. But there is a catch: the US Treasury is broke and needs to borrow at least $1 trillion in the next few months, sucking out liquidity from the market. That is a big bearish risk.

The bulls also cheered the strong May jobs report, which showed a huge jump in payrolls and a slight increase in unemployment. Usually, this would be bad news for the market, as it would signal a tighter Fed policy. But today, the market shrugged off that possibility and focused on the positive side of a robust labor market.

But how reliable are these numbers? Economist Nick Bunker questioned the quality of the payroll data:

The unemployment rate rose for all the wrong reasons. More employed people moving into unemployment and fewer unemployed workers finding jobs.”

ZeroHedge pointed out a possible source of distortion:

The birth death model “added” 231K jobs in March. These are not actual jobs, but merely an assumption by the BLS as to how many new businesses were created and hired workers based on statistical assumptions. Again, these are not actual jobs.

Today’s rally was broad based, with our Domestic Trend Tracking Index (TTI-section 3), finally outperforming the S&P 500. That had not been the case for most of 2023, as only a small segment of the market drove the gains.

These drivers were, and still are, Artificial Intelligence (AI) and General Productivity Tools (GPT).

Without them, the rest of the market would be in negative territory for the year. It is debatable whether this is a bubble, or a genuine technological breakthrough based on fundamentals.

Of course, no rally is complete without a short squeeze. That happened today when yesterday’s squeeze continued in two stages. Regional bank stocks, as represented by KRE, rose for the third week in a row, despite losing deposits.

Bond yields climbed, the US dollar fell this week, despite a bounce today, and gold retreated after touching $2k mid-week.

On Wall Street, none of these worries mattered as optimism prevailed. Some traders called this a “Goldilocks” scenario, where inflation is cooling down and the Fed is easing up, creating a soft landing for the economy.

I wouldn’t bet on it.

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Weekly StatSheet For The ETF Tracker Newsletter – Updated Through 06/01/2023

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ETF Data updated through Thursday, June 1, 2023

How to use this StatSheet:

  1. Out of the 1,800+ ETFs out there, I only pick the ones that trade over $5 million per day (HV ETFs), so you don’t get stuck with a lemon that nobody wants to buy or sell.
  1. Trend Tracking Indexes (TTIs)

These are the main indicators that tell you when to buy or sell Domestic and International ETFs (section 1 and 2). They do that by comparing their position to their long-term M/A (Moving Average). If they cross above, and stay there, it’s a green light to buy. If they fall below, and keep going, it’s a red light to sell. And to make sure you don’t lose your shirt if things go south, I also use a 12% trailing stop loss on all positions in these categories.

  1. All other investment areas don’t have a TTI and should be traded based on the position of each ETF relative to its own trend line (%M/A). That’s why I call them “Selective Buy.” In other words, if an ETF goes above its own trend line, you can buy it. But don’t forget to use a trailing sell stop of 12%, or less if you’re feeling nervous.

If some of these words sound like Greek to you, please check out the Glossary of Terms and new subscriber information in section 8.

  1. DOMESTIC EQUITY ETFs: BUY— since 12/01/2022

Click on chart to enlarge

This is our main compass, the Domestic Trend Tracking Index (TTI-green line in the above chart). It just dipped below its long-term trend line (red) by -0.74%, but it’s still in “Buy” mode for now.

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Congress Clears Debt Hurdle, Traders Cheer And Fear

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[Chart courtesy of]

  1. Moving the markets

After weeks of political drama, Congress finally passed the debt ceiling bill last night, much to the relief of the traders who celebrated with a rally. The bill is now heading to the Senate, where it is expected to sail through smoothly. Sources say the Senate won’t rest until Biden signs it into law.

This is a big win for the traders, who can breathe easier without the looming threat of a default. But they shouldn’t get too comfortable, because another challenge awaits them in a few weeks: the Fed’s decision on whether to raise interest rates again.

The Fed has a tough choice to make, as the economic data is sending mixed signals. On one hand, jobless claims rose slightly from last week, staying near 18-month highs. On the other hand, ADP reported stronger than expected job gains, which would be great if not for the sluggish wage growth. So, what will the Fed do? My guess is they will go for a modest 0.25% hike.

Today’s rally was not a one-man show, but a team effort with most sectors joining in. Even the regional banking sector ETF KRE bounced back from yesterday’s losses. Bond yields fell back, but the US dollar took a bigger hit, dropping to its lowest level since January, as ZeroHedge noted. That gave Gold a chance to shine, as it flirted with the $2k mark but couldn’t seal the deal.

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Market Dips As Debt Deal Hangs In Balance And Fed Sends Mixed Signals

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[Chart courtesy of]

  1. Moving the markets

Wall Street was in a gloomy mood today as the debt ceiling deal faced uncertainty and opposition in Congress. The House Rules Committee approved the deal, but the final vote will take place tonight at 8:30pm EST. The major indexes stayed in the red all day, despite a late rally that trimmed some losses.

Investors are wondering if the deal will pass in time to avoid a default, or if more negotiations and delays are ahead. Some lawmakers have expressed their dissent, which could jeopardize the whole process.

The month of May was a mixed bag for the market. The S&P 500 barely gained +0.26%, the Dow lost over 3%, but the Nasdaq soared by 6%. However, this performance was driven by a few tech giants, like Nvidia, which surged 40% in May but fell 10% yesterday.

The market’s strength was too narrow and uneven. The top five S&P stocks averaged a whopping 50% mean return this year, while the rest of the 495 stocks were flat. This does not reflect a healthy bull market, but rather a bear market rally.

Adding to the bearish sentiment were some conflicting signals from the Fed officials. Some of them hinted at raising rates sooner to curb inflation, while others suggested pausing or skipping rate hikes to see more data. The Fed’s stance was as clear as mud.

On the economic front, we saw a sharp drop in the Chicago PMI, but a strong increase in job openings in April. The Citi Economic Surprise index bounced back in May.

Some notable stocks that suffered in May were Budweiser and Target. Bond yields and the US dollar rose, while gold slipped below $2k but held above its March lows.

The market is facing a divergence between commodities, real yields, and the dollar on one hand, and the tech frenzy fueled by AI on the other. How long can this gap last?

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Debt Ceiling Deal in Doubt, Markets Waver

Ulli Market Commentary Contact

[Chart courtesy of]

  1. Moving the markets

The debt ceiling drama is far from over. Even though the two parties have reached a tentative deal, they still need to pass it in Congress by tomorrow. But many lawmakers are not in town, and some Republicans are not on board. This could spell trouble for the compromise bill.

The markets were optimistic at first, but then reality kicked in. Traders realized that the deal is not a done deal, and that the Fed is still looming large. The Fed’s Barkin admitted that inflation is not going away anytime soon, which raised fears of more rate hikes in June.

The economic data did not help either. The Dallas Fed Manufacturing Survey shrank for the 13th month in a row, consumer confidence fell to its lowest level since 2022, and home prices dropped for the first time in nine years. These are not signs of a strong economy.

The only bright spot was the tech sector, especially the artificial intelligence (AI) stocks. Nvidia became the seventh company to join the $1 trillion club, thanks to its booming chip business.

Bond yields fell, while the dollar wobbled. Gold finally got some love.

So, what’s next for the markets? It all depends on whether the debt ceiling deal gets done, and what the Fed does next. All investors should brace for more volatility and uncertainty in the coming days. Stay tuned for more updates.

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ETFs On The Cutline – Updated Through 05/26/2023

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Below, you can evaluate the latest High-Volume ETF Cutline report, which shows how far above or below their respective long-term trend lines (39-week SMA) my currently tracked ETFs are positioned.

This report covers the HV ETF Master List from Thursday’s StatSheet and includes 312 High Volume ETFs, defined as those with an average daily volume of more than $5 million, of which currently 138 (last report: 173) are hovering in bullish territory. The yellow line separates those ETFs that are positioned above their trend line (%M/A) from those that have dropped below it.

Take a look:                                                                   

The HV ETF Master Cutline Report

In case you are not familiar with some of the terminology used in the reports, please read the Glossary of Terms. If you missed the original post about the Cutline approach, you can read it here.