1. Moving the Markets
European and Asian markets were down and so were the US major indexes, at least in the early part of the session. Then the usual afternoon Lift-A-Thon pulled the major indexes up but we still closed slightly below the unchanged line.
Well, Wall Street was hoping that the S&P 500 would push to a new record high today, but that did not happen. The index, haunted by speculation over weak global growth and a steep drop in government bond yields, ended down 0.2% after a three-day run towards an all-time high.
Also weighing on stocks of late is a rise in the value of the USD, which is putting pressure on commodities, such as oil. U.S. crude fell 1.54% today to close at $50.44 per barrel. U.S. oil topped $51 a barrel yesterday, which marked an eleven-month high and investors remain bullish that the commodity will push even higher heading into summer.
In regards to the current nosebleed level of the markets, here’s the latest S&P 500 price chart compared to its earnings per share (EPS) expectations, courtesy of ZH:
This picture is worth a thousand words. My point here is that whatever you invest in, you must have an exit strategy in order to protect your assets once reality sets in and this index tumbles back to earth.
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.
Here are the 10 candidates:
The above table simply demonstrates the magnitude with which some of the ETFs are fluctuating in regards to their positions above or below their respective individual trend lines (%M/A). A break below, represented by a negative number, shows weakness, while a break above, represented by a positive percentage, shows strength.
For hundreds of ETF/Mutual fund choices, be sure to reference Thursday’s StatSheet.
Year to date, here’s how the above candidates have fared so far:
Again, the first table above shows the position of the various ETFs in relation to their respective long term trend lines (%M/A), while the second one tracks their trailing sell stops in the “Off High” column. The “Action” column will signal a “Sell” once the -7.5% point has been taken out in the “Off High” column.
3. Trend Tracking Indexes (TTIs)
Our Domestic Trend Tracking Index (TTI) barely changed while the International one dropped as global markets were in sell-off mode.
Here’s how we closed:
Domestic TTI: +2.47% (last close +2.55%)—Buy signal effective 4/4/2016
International TTI: +1.79% (last close +2.51%)—Buy signal effective 6/7/2016
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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Comments 2
Hi Ulli, Every time you post that S&P chart, I get nervous. It seems so obvious that markets will have to fall drastically that I wonder if you considered skipping the the buy signal? I also wonder if someone like me, who might miss a big one/two day drop, should get out now. P.S., I entered the ETF market with your last buy signal. Thanks for all your data sharing, etc.!
Kirk,
The reason for me posting these S&P charts is to make readers aware not only of the importance of where the market hovers relative to underlying fundamentals, but to emphasize the absolute necessity of having and executing a trailing sell stop to protect our assets whenever the inevitable correction occurs.
No, I don’t engage in guesswork by attempting to cherry-pick only certain Buy cycles. It defeats the purpose of using a disciplined investment approach, so you have to take the good with the bad, because nobody can tell me with any certainty as to which Buy cycle will be profitable and which one will not be.
Having said that I also believe that the most important component of investing in anything is the investor’s comfort level. If you are nervous about the index levels and lose sleep because of your exposure, you might consider getting out and into cash no matter what my Trend Tracking Indexes say. There is no sense in following any strategy if you are not at ease with it.
Ulli…