- Moving the markets
Good earnings by consumer heavyweights Target, Lowe’s and Home Depot set the bullish mood early on and pushed equities up to a level that they sustained throughout the session. All of yesterday’s losses were wiped out with the S&P 500 closing exactly at Monday’s price.
The Fed minutes did not offer any earthshaking news other than to confirm that the July rate cut was simply insurance for growth and inflation and considered to be a mid-cycle adjustment. It’s supposed to help counter the effects of weak global growth and trade uncertainty.
Good economic news came from housing sector, as we learned that Existing Home Sales rose YoY and thereby breaking a 16-month losing streak. They came in at +0.6%, while the median sales price also advanced by 4.3% from a year earlier.
Offsetting this good news were reports that the RV industry crashed with domestic shipments to dealers plummeting 20% so far this year, after dropping only 4% for the entire year of 2018. Ouch.
On the global scene, Germany attempted to sell the world’s first 30-year negative yielding bond (-0.11%), which failed miserably. When the dust settled, it turned out that only 824 million Euro of the total 2 billion Euro offering were sold with the Bundesbank now being forced to retain the unsold portion. That’s a big ouch. After all, government bonds need to be sold to cover the ever-growing deficits.
For the week, we saw that Monday was up, Tuesday was down, and Wednesday was up. This rollercoaster may very well continue until the bankers’ Jackson Hole meeting ends on Friday, or the weekend G-7 meeting results, or lack thereof, make their presence felt on Monday.
2. 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.
For this current domestic “Buy” cycle, here’s how some our candidates have fared:
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%.
3. Trend Tracking Indexes (TTIs)
Our Trend Tracking Indexes (TTIs) reversed as the rollercoaster continued.
Here’s how we closed 08/21/2019:
Domestic TTI: +2.76% above its M/A (prior close +1.93%)—Buy signal effective 02/13/2019
International TTI: -0.83% below its M/A (prior close -1.34%)—Sell signal effective 08/15/2019
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.
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