Bounce Back Tuesday

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Tue pic

[Chart courtesy of]

1. Moving The Markets

U.S. stocks rallied today, helped by data showing a smaller-than-expected trade gap and gains by health-care stocks following an upgrade for UnitedHealth Group Inc. UnitedHealth Group Inc. (UNH) +3.06%  performed best among Dow components and provided a boost to the blue-chip index after Deutsche Bank upgraded the company on Tuesday to buy from hold. Firmer overseas markets data also provided a lift, and traders absorbed largely encouraging comments from Federal Reserve officials. The U.S. trade deficit fell to $34.3 billion in November, the Commerce Department said on Tuesday. That was a steeper-than-expected drop and could signal a stronger economy.

European stocks pushed higher Tuesday after the annual rate of euro-zone inflation fell further below the European Central Bank’s target in December. That triggered some deflation concerns, but analysts also said it could put pressure on the ECB to respond with stimulus measures. Asian stocks closed mostly higher, while gold fell, but the dollar rose and oil futures snapped a five-session losing streak.

With record cold temperatures gripping a large portion of the country, the demand for natural gas has increased exponentially. Over the last month there have been some nasty cold spells that have hit everywhere from the Northeast to the South and in between. The price of natural gas is often driven by extreme weather and the current situation is no different. Considering this trend, United States Natural Gas ETF (UNG) rallied to end 2013 with a gain of 9.5 percent and has recently pulled back from a multi-month high. This is an ETF to keep an eye on as freezing temps continue.

With the major indexes heading to the upside, our 10 ETFs in the Spotlight showed some life again.

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 sell off in the month of June 2013 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)

Our Trend Tracking Indexes (TTIs) gained momentum and pulled above their long term trend lines by the following percentages:

Domestic TTI: +4.24% (last close +3.93%)

International TTI: +6.44% (last close +6.13%)


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