Trade-Talk Optimism Meets Weak Economic Data; Equities Stumble

Ulli Market Commentary Leave a Comment

[Chart courtesy of]
  1. Moving the markets

Despite continued trade talk optimism, the markets were not able to gain any footing and never managed to climb back above the unchanged line. Weak economic data points supported the bearish mood, but it was not enough of an early drop to keep me from executing our International ‘Buy’ signal by purchasing a low volatility global ETF.

Domestic economic news was negative all the way around but, surprisingly, the equity pullback was moderate with the major indexes surrendering less than -0.50% with global markets doing even better.

Here’s what made headline news:

Durable-goods orders rose 1.2% but failed to meet expectations of 1.4%.

A key measure of business investment, known as core orders, slipped -0.7%.

Manufacturing activity tumbled while leading indicators headed south by -0.1%.

Existing home sales fell -1.2% in January, its third straight month of declines

It will be interesting to see to how far the “trade news headline ping-pong” can carry this market before traders become impatient and reverse their bullish attitude. However, the latest statement disclosed that U.S. and Chinese negotiators are in the process of outlining a proposal to end the endless tit-for-tat.

I had to laugh when ZH reported this:

So, with earnings season almost done and no economic news tomorrow, can traders relax for a bit? Hardly: expect headlines from the ongoing US China trade talks to start leaking over the next few hours, while tomorrow’s barrage of Fed speakers (8 of them) virtually assures that the market will be talked higher come hell or high water.

In the meantime, both of our Trend Tracking Indexes (TTIs) remain on the bullish side of their respective trend lines thereby supporting our current ‘Buy’ signals.

  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 some our current candidates for this current ‘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) slipped a tad but remain on the bullish side of their respective trend lines. As mentioned above, the new International ‘Buy’ signal was confirmed today.

Here’s how we closed 02/21/2019:

Domestic TTI: +3.03% above its M/A (last close +3.44%)—Buy signal effective 02/13/2019

International TTI: +0.99% above its M/A (last close +1.26%)—Buy signal effective 02/21/2019

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 specified guidelines.

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