Equity Markets Drop Again; Gold Glitters

Ulli Market Commentary 2 Comments

Wed pic

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

The Fed announced today that it will reduce its monthly bond buying plan by an additional $10 billion, despite signs of turmoil across emerging markets recently. The announcement added volatility to the markets today and thus global and domestic equity markets fell accordingly as the chart above shows.

Boeing Co. (BA) led the pack of the DJIA losers today, down 5.15% following a disappointing report for the company’s 2014 outlook. Taking the number two spot in the DJIA loser column was Coca-Cola (KO), down 2.5% as the consumer goods sector took a beating across the board today.

Facebook (FB) was back in the news today. Its shares gained 10% in after hour trading as the company released its Q4 2013 report that showed a revenue jump of 63%, which beat Wall Street’s target. Facebook is cashing in on mobile ad sales big time, which is predicted to continue accelerating growth given that mobile ads represent about 50% of its total advertising revenue.

In the ETF world, the Direxion Daily Gold Miners Bull 3X Shrs (NUGT) experienced the largest amount of trading volume of major ETFs and ended the day up 9.04%. Overall, Gold and Silver ETFs performed well amid the broader market drop today and the gold mining space is one of few sectors that are positive for the year thus far, up about 4%.

Our 10 ETFs in the Spotlight kept sliding with the indexes with 2 of them now having slipped below their respective long-term trend lines, as you can see in the chart 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:


While XLP has been hugging its trend line on both sides recently, it broke below it again today. Howver, its trailing sell stop (see table below) has not been triggered yet. All others remain in “buy” mode meaning their prices are above their respective long term trend lines by the percentage indicated (%M/A), although SPLV just barely went negative today.

Since we have holdings in XLP, I will monitor this position closely. If it slips further, I will liquidate before its sell stop gets triggered in order to minimize the downside risk. You would think that XLP being one of the more conservative ETFs you can own would hold up better than others during a correction as we are seeing now, but it didn’t. So it may very well to be the first “casualty” of this market pullback.

Year to date, here’s how the above candidates have fared so far:

3. Domestic Trend Tracking Indexes (TTIs)


Our Trend Tracking Indexes (TTIs) slipped after yesterday’s rebound but still remain on the bullish side of their respective trend lines:

Domestic TTI: +1.98% (last close +2.45%)

International TTI: +3.80% (last close +4.22%)

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Comments 2

  1. Hi Ulli. I’m a bit confused by your table above which shows that SPLV has dropped below it’s 39 week moving average. Please view this link where I have used Stockcharts to plot the 195 day moving average of that ETF:

    As you can see, it is still above its 195 day moving average (I can’t plot weekly moving averages with the free version). The ETF cloased at $32.01 and the 195 day moving average is shown to be $31.67. Can you please explain this to me?

    Thanks for all your work on our behalf!

  2. Ian,

    Well, there is a difference between the 39-week SMA and the 195 day SMA, so that may account for some of the difference. How dividends are calculated may be another reason. Keep the big picture in mind in that SPLV barely moved below the line. I want to see a drop into negative territory of at least 1% before taking action. For disclosure sake, we don’t own SPLV.


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