SCOTUS Rules Against POTUS—Markets Pull Back

Ulli Market Commentary Leave a Comment

[Chart courtesy of MarketWatch.com]

  1. Moving the markets

An early bump in the tech sector gave way to selling, as the bears took charge of today’s session early on. Increasing coronavirus cases in Florida, Texas and California added to Wall Street’s woes with even the Nasdaq temporarily succumbing to red numbers, albeit at a lesser degree than the other major indexes.

Almost 50 million Americans have now filed for first-time jobless benefits since the beginning of the lockdown, according to ZH. This week, we saw initial claims of 1.314 million, a slightly better number than the 1.375 million expected.  

Taking the starch out of the early bump, and dropping stocks suddenly, was news of the SCOTUS Trump decision that a NY Grand Jury can get access to Trump’s tax returns, prompting ZH to comment:

This sparked instant selling pressure on the market, as it seems investors may have suddenly come to the realization that Biden could win (and Dems take the Senate) sending the S&P into the red…

It seems the market cares about a Trump presidency after all…

In the end, the Nasdaq managed to crawl back into green, despite late news that Joe Biden wants to raise the corporate tax rate to 28%, while the Dow and S&P closed in the red, with the former taking the bigger beating.

I have some business commitments now, so this post will be a short one, but I will update the TTIs and the Spotlight table later this afternoon.

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 headed south again with the markets not being able to recover all the way from the mid-session dump.

This is how we closed 07/09/2020:

Domestic TTI: -2.98% below its M/A (prior close -1.41%)—Sell signal effective 06/25/2020

International TTI: -2.19% below its M/A (prior close -1.31%)—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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