Sloppy And Choppy

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

Market behavior can only be described as sloppy today after the minutes from the FOMC meeting showed, what only few analysts had assumed, that the effects of the Fed’s asset purchases have a diminishing effect over time. The general consensus had been that the recent tapering effort was supported by an improving economy.

ADP reported that 238,000 jobs were created in December, which exceeded estimates. It now remains to be seen if Friday’s US Labor Department’s employment report supports these numbers.

If they are better than expected, further tapering by the Fed could be a possibility. Combining the positive ADP numbers along with the upward revision of November numbers and recent greatly improved trade deficit data, some analysts are already making the case for a higher 2014 GDP estimate.

With the major indexes moving predominantly sideways, our 10 ETFs in the Spotlight followed suit.

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: +4.08% (last close +4.24%)

International TTI: +6.68% (last close +6.44%)

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