TRADE WAR FEARS WIPE OUT EARLY GAINS
- Moving the markets
An early rally ran into a brick wall, reversed with the major indexes heading south and below their respective unchanged lines. Causing this sudden change in sentiment was a report, released mid-day, indicating that Trump still intends to impose tariffs on China, despite recent words of reconciliation and apparent lessening of tensions.
That’s all it took to take the starch out of upward momentum, however, the indexes managed to crawl back with the Dow and S&P 500 ending up slightly in the green. For the week, the Dow gained +0.9%, the S&P added +1.2%, while the Nasdaq scored +1.4%.
On the economic front, the latest data points show mixed numbers. Retails sales missed across the board with auto sales sliding. Sentiment soared with economic optimism hitting a 14 year high while industrial production surged the most since 2010.
Summing it up, Treasury yields rose with the 10-year bond briefly touching the 3% level during the session before backing off and closing at 2.99%. While the US dollar ended the week lower, it remains stuck in a trading range when looking at the big picture. Some Emerging Market currencies rebounded but others stayed below their unchanged lines, as you can see here with especially Brazil and Argentina showing sharp losses.
Despite the ups and downs from the verbal ping pong, generated by the seemingly never-ending trade tug-of-war, we gladly accept this having turned out to be a positive week.
- 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 regarding 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 -8% point has been taken out in the “Off High” column. For more volatile sector ETFs, the trigger point is -10%.
- Trend Tracking Indexes (TTIs)
Our Trend Tracking Indexes (TTIs) were mixed with the Domestic one slipping and the International one gaining.
Here’s how we closed 09/14/2018:
Domestic TTI: +5.26% above its M/A (last close +5.35%)—Buy signal effective 4/4/2016
International TTI: -0.17% below its M/A (last close -0.31%)—Buy signal effective 7/26/2018
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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