1. Moving The Markets
The bulk of today’s advance occurred shortly after the open as the Dow, Nasdaq, and S&P 500 notched their highs during the initial 30 minutes. Despite today’s gain, the benchmark index remains lower by 1.1% in December. The energy sector (+1.0%) displayed strength from the open after its largest component, Exxon Mobil (XOM), was upgraded to ‘Buy’ from ‘Neutral’ at Goldman Sachs. Crude oil, which added 0.9% to $97.47/bbl, also played a part in the sector’s strength.
Two major deals caught investors’ attention today: Chipmaker Avago Technologies is buying LSI Corp. for $6.6 billion. And AIG is selling its aircraft leasing business for about $5.4 billion to Dutch leasing company AerCap. AIG has been selling major assets after getting a bailout during the financial crisis.
On the economic front, revised productivity data for the third quarter showed an increase of 3.0%, which was above the 2.7% increase that had been expected by the Briefing.com consensus. The Fed will release a statement and projections for the economy Wednesday. Economists are almost unanimous in believing that the Fed will not begin winding down its stimulus program just yet.
In ETF trading on Monday, the Junior Gold Miners ETF (GDXJ) is outperforming other ETFs, up about 2.9% on the day. Components of that ETF showing particular strength include shares of DRDGOLD (DRD), up about 36.9% and shares of Brigus Gold (BRD), up about 33.5% on the day. Underperforming other ETFs today is the iShares Mortgage Real Estate Capped ETF (REM), down about 0.4%.
All of our ETFs in the Spotlight reversed course and edged up. I have adjusted the High points, used to calculate the trailing stop losses, for YTD distributions, as you can see in the second table below:
2. ETFs in the Spotlight
In case you missed the announcement and description of this section, you can read it here again.
It features 10 broadly diversified ETFs from my HighVolume list as posted every Monday. Furthermore, they are screened for the lowest MaxDD% number meaning they have been showing better resistance to temporary sell offs than all others over the past year.
In other words, none of them ever triggered their 7.5% sell stop level during this time period, which included a variety of severe market pullbacks but no move into outright bear market territory.
Here are the 10 candidates:
All of them are in “buy” mode meaning their prices are above their respective long term trend lines by the percentage indicated (%M/A).
Now let’s look at the MaxDD% column and review the ETF with the lowest drawdown as an example. As you can see, that would be XLY with the lowest MaxDD% number of -5.73%, which occurred on 11/15/2012.
The recent sell off in the month of June did not affect XLY at all as its “worst” MaxDD% of -5.73% still stands since the November 2012 sell off.
A quick glance at the last column showing the date of occurrences confirms that five of these ETFs had their worst drawdown in November 2012, while the other five were affected by the June 2013 swoon, however, none of them dipped below their -7.5% sell stop.
Year to date, here’s how the above candidates have fared so far:
3. Domestic Trend Tracking Indexes (TTIs)
Trend wise, our Trend Tracking Indexes (TTIs) reversed from last week’s sell off and headed further into bullish territory:
Domestic TTI: +3.59% (last close +3.31%)
International TTI: +5.03% (last close +4.45%)
Disclosure: I am obliged to inform you that I, as well as advisory clients of mine, own some of these listed ETFs. Furthermore, they do not represent a specific investment recommendation for you, they merely show which ETFs from the universe I track are falling within the guidelines specified.
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