Weekly StatSheet For The ETF Tracker Newsletter – Updated Through 01/21/2021

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ETF Data updated through Thursday, January 21, 2021

Methodology/Use of this StatSheet:

1. From the universe of over 1,800 ETFs, I have selected only those with a trading volume of over $5 million per day (HV ETFs), so that liquidity and a small bid/ask spread are assured.

2. Trend Tracking Indexes (TTIs)

Buy or Sell decisions for Domestic and International ETFs (section 1 and 2), are made based on the respective TTI and its position either above or below its long-term M/A (Moving Average). A crossing of the trend line from below accompanied by some staying power above constitutes a “Buy” signal. Conversely, a clear break below the line constitutes a “Sell” signal. Additionally, I use a 7.5% trailing stop loss on all positions in these categories to control downside risk.

3. All other investment arenas do not have a TTI and should be traded based on  the position of the individual ETF relative to its own respective trend line (%M/A). That’s why those signals are referred to as a “Selective Buy.” In other words, if an ETF crosses its own trendline to the upside, a “Buy” signal is generated. Since these areas tend to be more volatile, I recommend a wider trailing sell stop of 7.5%-10% depending on your risk tolerance.

If you are unfamiliar with some of the terminology, please see Glossary of Terms and new subscriber information in section 9.     

1. DOMESTIC EQUITY ETFs: BUY — since 07/22/2020

Click on chart to enlarge

Our main directional indicator, the Domestic Trend Tracking Index (TTI-green line in the above chart) has now rallied above its long-term trend line (red) by +20.01% and remains in “BUY” mode as posted.

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Riding The Range

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

  1. Moving the markets

After yesterday’s euphoric dash to all-time highs, the futures continued their relentless march higher, still boosted by optimism that a giant wave of fiscal spending will not only power corporate earnings but also revive, or rather rescue, economic growth.

However, that reckless enthusiasm was tempered somewhat during the regular session with the major indexes riding the range and closing just about unchanged. Despite clinging to the unchanged line, the Nasdaq and S&P managed to eke out another record.

The tech sector has been the big dog over the past couple of sessions, with the Nasdaq powering ahead by +0.55%, thereby clearly outperforming SmallCaps (IWO), which surrendered -0.81% on the day.

Of course, the vaccine story remains in the headlines:

Equities closed at record highs in the previous session as President Joe Biden was sworn into office, ushering in hope that an improved vaccine rollout will ensure a smoother and faster reopening. Some on Wall Street are optimistic that Biden’s plans to combat the pandemic will give the stock market a further boost through 2021.

On the economic front, things continue to look dicey in the employment arena. We learned that 900k Americans filed for first-time unemployment benefits last week, which is at 4-month highs. While that is below the expected 935k number, it is nevertheless a horrific stat.

It’s hard to say whether theses consistently bad numbers point to trouble on the horizon, but they pretty much assure us ongoing central bank interventions and more stimulus programs.

Tweeted my favorite analyst Sven Henrich:

And there you have it from a different viewpoint. It’s not the economy that determines market direction—it’s the creation of “free” money, also known as global liquidity, which powers the investment universe.

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New President—New All-Time Highs

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

  1. Moving the markets

The futures markets bounced around in record territory supported by positive earnings and continued prospects of much more stimulus as Biden prepared to take charge.

This bullish bias was sustained from the opening bell and, after a smooth transition of power, the major indexes shifted into overdrive and never looked back.

The top gainers in the ETF arena changed a bit when, after an early strong surge, SmallCaps (IWO) lost their momentum and closed off their highs but still with a respectable +0.41%, especially given recent stunning advances.  

The Nasdaq ruled with a strong finish of +1.97%, but it was bested by one of our holdings, namely SCHG, which rose a chest pounding +2.63%. Even GLD, which traveled a roller-coaster all day, thanks to swings in the US Dollar, ended the day +1.62% but still short of its $1,900 level.

Of course, it’s all about the stimulus and hopes for a speedy recovery, no matter what the cost, however caution is warranted:

“The market is rallying on hopes for a speedier recovery,” Peter Cardillio, chief market economist at Spartan Capital, told MarketWatch.

But Cardillio also views equity market as “somewhat overbought” and likely due for a pullback, potentially once markets are confronted with the prospects of at least a partial rollback of Trump-era corporate tax cuts and a tighter regulatory environment. “There will come a point in time when the market will reflect on the new administration’s policies,” he said.

Still, traders were still clinging to Tuesday’s news, during which Janet Yellen, Biden’s designated nominee for Treasury Secretary, endorsed higher aid spending and urged lawmakers to “act big.” Maybe that was the true reason gold to take off today?

So far, earnings season has been viewed as a positive with solid quarterly results, but that is not such a big deal, if you consider that we are merely rebounding off the pandemic lows.

In the end, the eagerly awaited inauguration day came and went without interruption, so today’s ramp higher could certainly be interpreted as a relief rally.

It’ll be interesting to see if there is more follow through to the upside coming our way.

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Stimulus Hope And Earnings Outlook Power Markets

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

  1. Moving the markets

The futures markets continued their rebound from yesterday into the regular session and recouped all of Friday’s losses. Propped up by Biden’s $1.9 trillion fiscal stimulus package, traders and algos alike shoved the markets higher with the major indexes never threatening to dip into the red.

Helping the bullish mood was willingness by the Fed to support markets, as well as news of a “stepping up” of the vaccine rollout. An additional assist came from Janet Yellen, the designated nominee for Treasury Secretary, who urged to “act big:”

“Neither the president-elect, nor I, propose this relief package without an appreciation for the country’s debt burden. But right now, with interest rates at historic lows, the smartest thing we can do is act big,” said Yellen. “I believe the benefits will far outweigh the costs, especially if we care about helping people who have been struggling for a very long time.”

Hmm… going “big” is just not a term that I like to hear, since it implies the sort of recklessness in terms of debt/deficits that only a politician can come up with. But it was exactly what Wall Street wanted to hear and as a result equities, bonds and precious metals gained, while the US Dollar dropped.

Though the Nasdaq led by adding +1.53%, it was bested again by SmallCaps (IWO), which surged an impressive +1.95%. Even GLD held ground for a change and gained +0.82%.

If tomorrow’s inauguration goes as anticipated, we may see a relief rally only due to the last remaining election uncertainty having been removed.

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ETFs On The Cutline – Updated Through 01/15/2021

Ulli ETFs on the Cutline Contact

Below, please find 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 267 (last week 271) 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.      

ETF Tracker Newsletter For January 15, 2021

Ulli ETF Tracker Contact

ETF Tracker StatSheet          

You can view the latest version here.


[Chart courtesy of MarketWatch.com]

  1. Moving the markets

The futures already painted bleak picture based on doubts whether Biden really would be able to pass its $1.9 Trillion stimulus package. Some see it as untenable, so the cash market took a dive at the opening. As slow climb out of that early hole reduced losses somewhat, but in the end, the major indexes closed in the red registering a rare weekly loss.

Tom Essaye, founder of The Sevens Report, said the proposal was “being met by a ‘sell the news’ reaction as markets already priced in most of what was included.”

“Plans for future historical stimulus, easy Fed policy and vaccines are now well known, and as such those catalysts simply don’t have the positive influence on stocks that they have over the past few months,” he added.

There you have it. Much of the announcement was already priced in, and in typical market fashion, only a blow-out statement of epic proportions would have sent the indexes higher, because merely meeting expectations is considered a nonevent in today’s world.

Earnings season got underway for the banks and, despite better-than-expected results, banking stocks fell. Go figure…

Not helping markets was an announcement by Pfizer that EU vaccines will be delayed, thereby contributing to a spanking of stocks in Europe and in the US as well.   

From a weekly perspective, Tuesday’s spike in bond yields reversed with prices vacillating around the 1.1% level, which appears to be the inflection point at this time.

The US Dollar Index went for a wild ride but dashed higher today thereby influencing Gold prices negatively again. It seems that the precious metal can’t find enough of a footing to launch a sustainable rally from.

I expect this volatility to continue next week.

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