ETF Tracker StatSheet
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WHEN BAD NEWS IS GOOD NEWS—AGAIN
- Moving the markets
And so, the rollercoaster week has come to an end with the markets seeming to have broken out to the upside—at least for the time being.
The much-awaited December jobs report was interpreted as showing signs that inflation may be cooling, because of the Fed’s hawkish interest rate policy. The economy added 223k jobs, which was better than the expected 200k.
However more importantly, the bad news was that, at least for the working population, wages grew slower than anticipated by increasing only 0.3% on the month vs. 0.4% economists expected. That was good news for Wall Street, and the much-hyped theme that inflation is easing, which means that Fed might be pausing or pivoting soon. Consequently, the rate hike odds plunged.
The major indexes shifted into overdrive, never looked back and ended up closing the session with over 2% gains. ZeroHedge called it a buying panic, and not just in equites but bonds as well, as the 2-year yield crashed in dramatic fashion. The 10-year plunged 33bps, which is its best start to a year on record, Bloomberg posted.
That caused the US Dollar to dump and Gold to spike, with the precious metal gaining +1.7% on the day and closing solidly above its $1,850 level. It has now rallied 15% from its November lows.
While the bullish beast was fed well for the day, the question remains whether this was simply an outlier or the beginning of a new bullish trend. The latter could end in a hurry, should the Fed decide next week to send out some of its minions to public forums reiterating that their hawkish stance has not changed.
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 joined today’s Ramp-A-Thon and raced deeper into bullish territory.
This is how we closed 01/06/2023:
Domestic TTI: +3.15% above its M/A (prior close +0.57%)—Buy signal effective 12/1/2022.
International TTI: +5.82% above its M/A (prior close +3.49%)—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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