Major Market ETFs End Near Flat On Lowest Volume In 5 Years As Investors Move To The Sidelines

Ulli Market Commentary Contact

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US stocks changed little Thursday with the Dow Industrial slipping after four up sessions while the S&P 500 and the tech-heavy NASDAQ managing to extend their winning streak as US economic data surprisingly came in stronger than estimated.

The US dollar gained further against the single-currency as hopes of ECB intervention to halt the decline of peripheral states evaporated. The dollar index, a barometer of the greenback’s strength against a basket of six leading currencies, rose to 82.646 from 82.366 late Wednesday. The USD strengthened against the Japanese Yen as well after Bank of Japan decided to keep its assets purchase program unchanged.

Supported by Chinese economic data and positive earnings data from the region’s heavyweights, Europe’s benchmark stock index extended gains for the fifth straight day.

While the drug and food sector surged ahead, the telecom sector fell behind. Latest economic data from China provided some support as inflation numbers eased and retail sales and industrial production slowed down, making it easier for Beijing to loosen up monetary policy.

US Treasury yields pushed up higher amid further evidence of employment gains after data released by the Labor Department today showed jobless claims declined by 6,000 to 361,000 in the week ending August 4.

Risk sentiment improved, weakening demand for safe havens as speculations on further quantitative easing by the Fed diminished.

As equity markets slow down and investors move to the sidelines, ETF movements also show signs of deceleration. But not the The Van Eck Market Vectors Junior Gold Miners ETF (GDXJ), which was among the biggest gainers, adding more than 2.5 percent as gold prices rose more than $4 an ounce today.

A handful of developed and emerging market funds broke above their recent long-term moving averages. The iShares MSCI South Korea Index Fund (EWY), the iShares MSCI Taiwan Index Fund (EWT) and the iShares MSCI Poland Investable Market Index Fund (EPOL) were among the biggest gainers, adding 1.71 percent, 1.36 percent and 2 percent, respectively.

For the latest updates on my Trend Tracking Indexes (TTIs) and all momentum numbers, please see the most recent StatSheet, which I will post later on.

Disclosure: No holdings

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Comments 2

  1. There are several ways. You could pick a different ETF that is showing upward momentum and use that to fill the empty space. Or, if you like to stay with the model portfolio concept, you could substitute, say VTI in Model #2, with a less volatile fund. I have done that in my advisor practice by predominately using DVY all year instead of VTI with the result that we still own it, as its sell stop never got triggered during the pullback periods. Or, if you like to stick with VTI, re-enter once the old high, from which the 7% sell stop was calculated, has been taken out.

    Alternatively, there is nothing wrong with staying on the sidelines as some sort of pullback lies ahead with markets having gotten ahead of themselves; in my opinion.


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