1. Moving the Markets
Of course, it’s only the beginning of the third quarter earnings season but talk of growth expectations in the +0.2% area was the theme of the day. It also means that the quarter has to stay on this track to match the fourth-quarter of 2014 in which both earnings and revenues headed north. If that happens, it would bring to an end a four quarter string of declines. Netflix was the star of the day with a gain of 19%.
Offsetting corporate news was the reality we all have to live with and that is higher inflation. US consumer prices showed their biggest gain in five months with +0.3%. As you know, the Fed has a 2% inflation target and uses an inflation measure, which is currently at 1.7%. As we get closer to this target, the odds increase that a rate hike may no longer be avoided. After all, you can’t simply turn inflation on or off with a switch. Once it gains momentum it’s very difficult to reverse.
For the day, the three major indexes closed up, but it remains to be seen if the balance of earnings season can support current expectations.
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 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)
Both of our Trend Tracking Indexes (TTIs) followed the markets higher.
Here’s how we closed 10/18/2016:
Domestic TTI: +1.50% (last close +1.22%)—Buy signal effective 4/4/2016
International TTI: +3.28% (last close +2.56%)—Buy signal effective 7/19/2016
Disclosure: I am obliged to inform you that I, as well as my advisory clients, own some of the ETFs listed in the above table. 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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