- Moving the markets
Friday’s month ending bounce-back is now in the rear view mirror as the floodgates opened this morning, and the major indexes headed straight south just about uninterruptedly until they found a support point this afternoon, which softened the damage for the day.
Nevertheless, chart damage was done with the S&P dropping below it’s widely watched 200-day M/A (-0.28%). This is the first time in about 18 months and generally a sign of weakening momentum that could invite further selling unless a quick bounce back recovers that level. That attempt fell short this afternoon.
There was simply no place to hide other than in gold. Tech took the lead down the elevator shaft again with FANGS getting hammered joined by bank stocks. Interest rates dropped with the 10-year bond yield hitting a two-month low at 2.73% while the US Dollar managed a slight rebound.
In terms of our Trend Tracking strategy, one of our trailing sell stops was triggered and will be liquidated tomorrow unless the markets stage a solid turnaround rally. The Domestic TTI has remained on the bullish side of its trend line but only by small margin. The International one has slipped barely below its own trend line, but by not enough of a margin to pull the trigger and declare this “Buy” cycle to be over.
However, we are very close. Should the markets show considerable weakness again tomorrow, I will then consider the International “Sell” to be validated and liquidate the appropriate holdings.
For details, please see section 3 below.
- ETFs in the Spotlight
In case you missed the announcement and description of this section, you can read it here again.
It features 10 broadly diversified 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 some of the ETFs are fluctuating in regards to their positions 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.
Year to date, here’s how our candidates have fared so far:
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 -7.5% point has been taken out in the “Off High” column.
- Trend Tracking Indexes (TTIs)
Our Trend Tracking Indexes (TTIs) headed south and are in danger of moving into bear market territory.
Here’s how we closed 4/2/2018:
Domestic TTI: +0.36% above its M/A (last close +1.28%)—Buy signal effective 4/4/2016
International TTI: -0.23% below its M/A (last close +1.11%)—Buy signal effective 7/19/2016
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 guidelines specified.
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