Apples Closes More Stores—CA Closes More Restaurants—Markets Rally

Ulli Market Commentary Leave a Comment

[Chart courtesy of MarketWatch.com]

  1. Moving the markets

Despite overnight weakness in the futures markets, positive momentum got restored on predominantly bad news, and the major indexes finished a volatile session in the green. The exception was the Dow, which hovered around its unchanged line before diving into the red at the close.

The early pump was based on another “positive” vaccine headline this time from Pfizer, which sent US equities soaring, because now the virus problem is resolved. Of course, I am being facetious here, but how else can you react to “medical results by press release,” as ZH put it:

In all 24 subjects who received 2 vaccinations at 10 µg and 30 µg dose levels of BNT162b1, elevation of RBD-binding IgG concentrations was observed after the second injection with respective GMCs of 4,813 and 27,872 units/ml at day 28, seven days after immunization. These concentrations are 8- and 46.3-times the GMC of 602 units/ml in a panel of 38 sera from subjects who had contracted SARS-CoV-2.

Hmm, 24 test subjects? I certainly would not feel comfortable being number 25, would you?

ZH summed up the items of interest, which “contributed” to today’s rally:

  • Pennsylvania 4th state to see record jump in COVID-19 cases
  • North Carolina reports record jump in COVID-19 cases
  • Cali orders 19 counties to close
  • Trump does U-turn on masks
  • California orders 19 counties including LA to close restaurants dining for 3 weeks
  • Apple closes another 30 stores
  • Atlanta Airport closes
  • California reports another record jump
  • Houston ICUS at 102% capacity
  • Nevada reports third-highest daily total yet
  • NY releases Wednesday numbers
  • Arizona reports another record daily case count
  • NYC delays return of indoor dining
  • Florida reports daily cases for last 24 hours
  • Goldman says 40% of US has rolled back economic reopening or put them on hold
  • Oxford scientist warns vaccine by end of year far from guaranteed
  • Pfizer vaccine headline sends futures higher
  • US reported 48k+ new cases yesterday
  • Australia locks down 300k in Victoria
  • Brazil imposes travel ban as deaths near 60k
  • Tokyo reports most cases since state of emergency lifted
  • German infection rate below R for 7th day

All of the above drove the markets with the Nasdaq scoring a new record high. The loser for the day was gold due to the prevailing opinion that that risk is back on and who needs protection.

The bond/stock divergence continues full force, prompting ZH to ask the all-important question:

Will this divergence re-couple? And if so, will it be stocks or bonds that are sold?

2. ETFs in the Spotlight

In case you missed the announcement and description of this section, you can read it here again.

It features some of the 10 broadly diversified domestic 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 these ETFs are fluctuating 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.

For this new domestic “Buy” cycle, which ended effective 6/25/2020, here’s how some our candidates have fared:

Click image to enlarge

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%.

3. Trend Tracking Indexes (TTIs)

Our TTIs drifted opposite ways with the international one slightly gaining and the domestic one slightly losing.

This is how we closed 07/01/2020:

Domestic TTI: -1.84% below its M/A (prior close -1.70%)—Sell signal effective 06/25/2020

International TTI: -3.50% below its M/A (prior close -3.73%)—Sell signal effective 02/26/2020

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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