ETF Tracker StatSheet
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WHEN BAD NEWS IS GOOD NEWS
- Moving the markets
The markets were back to interpreting bad news as good news for equities. This old meme was brought to the forefront again, as a dismal January payroll report sent the major surging at first with all of them closing in the green, despite some slippage late in the session.
Expectations were high that January would produce a solid job rebound, which did not happen. We saw the exact opposite, as a meager 105k expectation of news jobs created turned into the brutal reality of only 49k being produced.
When looking under the hood, as ZH did, that reality was even worse in that out of the 49k new jobs, 43k, or 88%, were created by governments and only 6k by private payrolls. Ouch. The only good news was that the unemployment rate tumbled to 6.3%.
To add insult to injury, the Labor Department also sharply revised down the numbers from December. Instead of having lost only 140k for that period, it turned out to be 227k!
If you are wondering why the markets did no sell off, but rallied instead, consider the simple assumption that this would likely increase further stimulus, which means more liquidity for the markets and therefor higher prices. Yes, that is all that matters, but some other factors come into play as well, as Adam Crisafulli of Vital Knowledge explained:
“The rally’s three pillars actually got stronger: Q4 earnings continue to dramatically exceed expectations, more stimulus is being poured into the economy, and the vaccination pace is accelerating.”
In the end, the major indexes produced their best weekly gains since November. The Dow added some +2%, while the S&P 500 and Nasdaq did far better with +4.6% and +5.6% respectively. However, SmallCaps took top billing with their remarkable 8% advance this week.
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 current domestic “Buy” cycle, 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 remained steady despite the markets edging up.
This is how we closed 2/05/2021:
Domestic TTI: +17.40% above its M/A (prior close +17.80%)—Buy signal effective 07/22/2020.
International TTI: +16.47% above its M/A (prior close +16.39%)—Buy signal effective 07/22/2020.
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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