ETF Tracker StatSheet
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CONQUERING THE FLAT LINE
- Moving the markets
After digging themselves out of an early hole, the major indexes crawled back slowly and surely to end another session on a positive note.
Q4 bank earnings were on the agenda, as JP Morgan beat revenue expectations but warned that it’s setting aside more money, an increase of 49% from Q3, to cover credit losses for what they termed a “mild recession.” The stock slipped initially but recovered late in the day.
Wells Fargo (WF) disappointed, with the stock dropping 4%, and BofA as well slid despite better-than-expected Q4 earnings. WF also added that it’s preparing for the economy to “get worse than it’s been over the last few quarters.”
Still, the S&P recorded its best week since November, as MarketWatch pointed out, and scored its second winning week in a row but falling just short of reclaiming its $4k level.
On the economic front, the Consumer sentiment survey showed that 1-year inflation expectations dropped to 4%, vs. 4.3% expected, which is the lowest 1-year outlook since April 2021.
Again, the short squeeze continued unabated and has now pushed up the most shorted stocks an amazing 18% in the past week. Bond yields gave an assist this week by dipping lower, as Fed rate trajectory expectations drifted as well but bounced higher today, as ZeroHedge pointed out.
Gold continued its ramp to higher levels and has notched 6 straight days of gains to reach its highest level since April 2022. The precious metal triggered a golden cross, which is the moment in time when the 50-day M/A crosses its 200-day M/A, a very bullish sign.
Gold does well in an era of uncertainty, which Treasury Secretary Janet Yellen seemed to indicate we are heading into, when she said that the US will hit the debt ceiling next Thursday, an event which analysts referred to as “significant market pain.”
2. “Buy” Cycle Suggestions
For the current Buy cycle, which started on 12/1/2022, I suggested you reference my most recent StatSheet for ETFs selections. However, if you came on board later, you may want to look at the most current version, which is published and posted every Thursday at 6:30 pm PST.
I also recommend for you to consider your risk tolerance when making your selections by dropping down more towards the middle of the M-Index rankings, should you tend to be more risk adverse. Likewise, a partial initial exposure to the markets, say 33% to start with, will reduce your risk in case of a sudden directional turnaround.
We are living in times of great uncertainty, with economic fundamentals steadily deteriorating, which will eventually affect earnings negatively and, by association, stock prices. I can see this current Buy signal to be short lived, say to the end of the year, and would not be surprised if it ends at some point in January.
In my advisor practice, we are therefore looking for limited exposure in value, some growth and dividend ETFs. Of course, gold has been a core holding for a long time.
With all investments, I recommend the use of a trailing sell stop in the range of 8-12% to limit your downside risk.
3. Trend Tracking Indexes (TTIs)
Our TTIs moved deeper into bullish territory, as positive sentiment prevailed during the latter part of the session.
This is how we closed 01/13/2023:
Domestic TTI: +5.96% above its M/A (prior close +5.63%)—Buy signal effective 12/1/2022.
International TTI: +9.34% above its M/A (prior close +8.78%)—Buy signal effective
12/1/2022.
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.
All linked charts above are courtesy of Bloomberg via ZeroHedge.
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