ETF Tracker StatSheet
You can view the latest version here.
WHEN GOOD NEWS IS BAD NEWS—AGAIN
- Moving the markets
All eyes were on the jobs report this morning when November payrolls unexpectedly surprised to the upside, as 263k new jobs were created, thereby handily beating expectations of a 200k print.
While that bodes well for a deteriorating economy, which has been ravaged by a multitude of negative econ reports—along with a host of companies announcing layoffs in the 10s of thousands—the markets were not happy and sold off sharply.
As I have repeatedly posted, good economic news is bad news for Wall Street, because it gives the Fed more ammunition to keep interest rates higher for longer in its battle to slay inflation, which is exactly the opposite of what traders and algos want to see, namely lower rates in support of the bullish thesis.
Traders managed to overcome the early drop, a slow climb through the remainder of the session cut down losses, and the major indexes recovered to end the day just about unchanged. Thanks to Tuesday’s Ramp-A-Thon, the three indexes gained for the week.
This was the final monthly employment report for 2022 and will likely form the basis for the next Fed decision on interest rates scheduled for Dec. 13-14, with a hike of “only” 50 bps to be expected.
Bond yields slipped again, with the 10-year closing at 3.5%. So did the Dollar, which has now dropped for the 6th week out of 7, dumping below its 200-day M/A and closing at its lowest since June.
Gold had a good week by recapturing its $1,800 level, its highest since August, as ZeroHedge reported.
We are now in the seasonally strong phase for equities and, barring any unforeseen circumstances, should see a continuation of this nascent Santa Claus rally.
2. “Buy” Cycle Suggestions
For the current Buy cycle, which starts on 12/1/2022, I suggest you reference my most recent StatSheet for ETFs selections. If you come 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 barely changed and remain in bull market territory.
This is how we closed 12/02/2022:
Domestic TTI: +4.30% above its M/A (prior close +4.31%)—Buy signal effective 12/1/2022.
International TTI: +3.79% above its M/A (prior close +3.72%)—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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