ETF Tracker Newsletter For January 17, 2025

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MARKETS SURGE AS MAJOR INDEXES ACHIEVE FIRST WEEKLY GAIN OF 2025

[Chart courtesy of MarketWatch.com]

  1. Moving the market

Today, the major indexes surged, marking not only their first weekly gain of 2025 but also their largest weekly advance since the November elections.

This broad-based rally saw participation from chipmakers, mega-tech, and small-cap stocks, with the widely followed S&P 500 gaining 1% for the day and 2.9% for the week.

Traders remain buoyant following consecutive reports indicating that the core CPI rose less than expected over the year, while the PPI also showed a smaller-than-expected increase for December. Consequently, the 10-year yield retreated sharply, contributing to this week’s rally.

Strong earnings from major banks further lifted equities, with some traders now referring to the current environment as a “goldilocks” scenario, which supposedly encourages more risk-taking in equities.

Adding to the positive sentiment is the anticipation of Trump’s inauguration as president on Monday, with traders betting on deregulation and lower taxes—two key promises from his campaign.

Dovish comments from Fed governors Waller and Goolsbee fueled rate-cut hopes, reversing the recent hawkish trend.

Bond yields tumbled sharply mid-week, with the 10-year yield dropping from 4.8% to close at 4.62%. The dollar slipped, gold rallied for the third consecutive week towards record highs, and Bitcoin surged towards its all-time high, with the ARKB ETF, which we own, gaining a solid 10.6% over the past week.

Oil prices fell below $78 after the Israel-Hamas deal eased some geopolitical tensions.

As Trump’s inauguration approaches, ZH pondered this question: Will the ‘Day One’ executive orders confirm the hope priced into the markets?

2. Current “Buy” Cycles (effective 11/21/2023)

Our Trend Tracking Indexes (TTIs) have both crossed their trend lines with enough strength to trigger new “Buy” signals. That means, Tuesday, 11/21/2023, was the official date for these signals.

If you want to follow our strategy, you should first decide how much you want to invest based on your risk tolerance (percentage of allocation). Then, you should check my Thursday StatSheet and Saturday’s “ETFs on the Cutline” report for suitable ETFs to buy.

3. Trend Tracking Indexes (TTIs)

The market experienced a significant surge today, characterized by a strong bullish sentiment that propelled all indexes to close higher.

This upward momentum was mirrored by our TTIs, which not only participated in the rally but also extended their distance from their respective trend lines. This movement aligns with our current optimistic market outlook.

This is how we closed 01/17/2025:

Domestic TTI: +4.52% above its M/A (prior close +4.36%)—Buy signal effective 11/21/2023.

International TTI: +2.37% above its M/A (prior close +2.03%)—Buy signal effective 11/21/2023.

All linked charts above are courtesy of Bloomberg via ZeroHedge.

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