Dropping And Popping

Ulli Market Commentary Leave a Comment

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

Equities took a hit early this morning with the Dow falling over 200 points, despite a generally optimistic view of the alleged progress made with the U.S.-China trade negotiations.

Casting a dark shadow on economic fundamentals was a report showing that US retail sales had simply collapsed in December (-1.2%), which resulted in the biggest drop in a decade. Trump’s chief economic advisor, Larry Kudlow, was quick to blame a “glitch” without adding a meaningful explanation.

As a result, the S&P 500 dropped below its all-important 200-day M/A again but reclaimed that level later in the day, when a mid-day rally pushed the index above its unchanged line. In the end, the major indexes sold off into the close but reduced the morning losses to a fraction of a percent. The Nasdaq was the exception, as it managed to eke out a tiny gain.

For sure, the lousy retail sales number is bound to affect the Q4 GDP number, with expectations now tumbling, as this chart shows. Some are forecasting a print in the low 1% range vs. the widely hoped for 3%.

Our Trend Tacking Indexes (TTIs) changed only slightly, and we are waiting for more upside momentum to propel the International TTI into bullish territory as well.

  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 from the prior ‘Buy’ cycle 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) both slipped a tad with no effect on our current position.

Here’s how we closed 02/14/2019:

Domestic TTI: +1.83% above its M/A (last close +2.07%)—Buy signal effective 02/13/2019

International TTI: -0.57% below its M/A (last close -0.33%)—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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