Lack Of Tax-Overhaul Progress Whacks Sentiment

Ulli Market Commentary, Uncategorized 1 Comment

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  1. Moving the Markets

While the major indexes suffered their biggest one-day percentage drops since September, as MSM reports, we have to remember that, when looking at the entire 2017 YTD performance, today’s 0.5% pullback is hardly newsworthy.

Nevertheless, a weak energy sector with XLE correcting -1.16% did not help matters. And, as I reported just about every day, skepticism about the tax-plan, or rather the lack of progress, kept any upward momentum in check. Today, we dropped right after the opening bell after which the usual recovery attempt was made, but it fell short mid-day as the bears kept the upper hand.

Needless to say, equity ETFs headed south to varying degrees. The exception was Financials (XLF), which gained +0.27%. On the downside, Semiconductors (SMH) slid -0.93% followed by the Dividend ETF (SCHD) with -0.76%.

Interest rates fell sharply with the yield on the 10-year bond slipping 5 basis points to 2.33%. That allowed the 20-year bond to stage a +1.09% rally, which wiped out some of its recent losses. The swings were wild in the High Yield arena as well with HYG taking a huge drop below its 200-day M/A only to recover and close unchanged.

  1. 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.

  1. Trend Tracking Indexes (TTIs)

Our Trend Tracking Indexes (TTIs) continued to head south by a small margin.

Here’s how we closed 11/15/2017:

Domestic TTI: +2.73% (last close +2.94%)—Buy signal effective 4/4/2016

International TTI: +4.98% (last close +5.45%)—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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