A Late-Day Comeback

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]
  1. Moving the markets

One market technician called yesterday’s massive rebound a sucker’s rally and for most of today, with the major indexes trading way down, his view seemed to be correct except, it was not over yet.

A powerful reversal during the last hour appeared to be a continuation of the quarter ending re-balancing by pensions plans (and a giant short squeeze) I mentioned yesterday. It pulled equities out of the doldrums, which ended in the green for the second day in a row, as the Dow staged a nearly 900-point turnaround.

The early plunge did not come as a surprise after economic confidence figures got smashed and the US jobs outlook crashed the most on record. December’s number dropped from 136.4 to 128.1 vs. expectations of 133.7 and slipped to its lowest level since July.

I expect this type of see-saw action to continue throughout the final trading days of this year, but I am pondering the question “what bullish forces might be left after the pension funds are done with their adjustments?

We’ll have to wait and see but, right now, no matter how much lipstick you put on December, it is still a pig as this chart (courtesy of ZH) shows.

  1. 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 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 regarding 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 our original candidates have fared:

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 -8% point has been taken out in the “Off High” column. For more volatile sector ETFs, the trigger point is -10%.

  1. Trend Tracking Indexes (TTIs)

Our Trend Tracking Indexes (TTIs) improved again thanks to a late session market reversal.

Here’s how we closed 12/27/2018:

Domestic TTI: -10.64% below its M/A (last close -11.43%)—Sell signal effective 11/15/2018

International TTI: -10.25% below its M/A (last close -10.77%)—Sell signal effective 10/11/2018

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.

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