- Moving the Markets
Despite another roller coaster ride, the Dow was the only one of the three major indexes that not only “survived” the mid-day sell-off but also registered another record high. The tech arena was not so lucky and, after a tremendous run in the recent past, had to accept the fact that nothing goes up forever. As a result, Apple dropped nearly 2% and the FANG stocks as a group simply puked with Google and Netflix losing the most and Facebook performing the best.
Not helping matters was the VIX spiking above 11 after hitting all-time lows yesterday. It’s too early to tell if that was just a dead cat bounce or the canary in the coalmine warning of more volatility to come. To be clear, the direction of the stock market is entirely dependent on volatility. Higher volatility translates to a bearish scenario while a lower VIX translates to a bullish environment. Some have cast their votes already, and one of them is well known hedge fund manager Jeff Gundlach who bought some S&P puts 5 months out, which will generate a nice return assuming a correction takes place within that time period.
Across asset classes, gold was the winner sporting a +0.79% gain while the Transportation (IYT) index got slammed at the tune of -3.10%. Financials joined the party with IYF dropping -0.50%; retailers (XRT) bucked the trend and added +1.45%. The yield on the 10-year bond spiked 3 basis points to close at 2.32%, and the US dollar (UUP) recovered some of yesterday’s sharp losses by adding +0.37%.
- ETFs in the Spotlight (updated for 2017)
In case you missed the announcement and description of this section, you can read it here again.
It features 10 broadly diversified and sector ETFs from my HighVolume list as posted every Saturday. 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.
The below 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 2017 candidates have fared so far:
Again, the %M/A column above shows the position of the various ETFs in relation to their respective long term trend lines, while the trailing sell stops are being tracked 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.
- Trend Tracking Indexes (TTIs)
Our Trend Tracking Indexes (TTIs) slipped as market weakness during mid-day was not overcome.
Here’s how we closed 7/27/2017:
Domestic TTI: +3.60% (last close +3.73%)—Buy signal effective 4/4/2016
International TTI: +8.63% (last close +8.90%)—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.Contact Ulli