Indexes Poised For Positive September Finish Despite Volatility

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

  1. Moving the market

The major indexes began the session without clear direction, hovering around their unchanged lines. However, they seem poised for a positive finish to this volatile month of September.

Stock performance was mixed. Hewlett Packard rose over 4% following an upgrade, while Germany’s SAP fell more than 2%, and General Motors dropped nearly 6% after a downgrade.

New Home Sales declined in August despite lower mortgage rates and increased mortgage applications. This data predates the Fed’s new easing cycle, raising the question: will we see a reversal soon?

Today, the tech sector was the standout performer, driven by gains in Nvidia and Meta. In contrast, Small Caps were the biggest losers, and utilities led among the sectors. The market lacked a clear driver, likely due to anticipation of Powell’s speech tomorrow and the latest GDP data release.

Bond yields increased, the MAG7 basket initially surged but faded by the close, and the most shorted stocks remained within their recent trading range. The dollar rebounded from yesterday’s weakness, recovering all losses.

Gold hit another intraday high but couldn’t maintain its advance into the close, diverging from the dollar. The stronger dollar also pulled down crude oil and caused Bitcoin to slump after Tuesday’s surge.

As Zero Hedge pointed out, US sovereign risk now exceeds recent months’ levels. Does this indicate that something has broken or is about to?

Read More

Gold Nears $2,700 As Dollar Weakens And Rate Cut Expectations Rise

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

  1. Moving the market

The markets experienced early volatility due to a sharp drop in the September Consumer Confidence Index, which pressured stocks. However, by the end of the day, the major indexes managed to close moderately higher.

The Consumer Confidence Index fell to 98.7, significantly below the revised August reading of 105.6 and marking its lowest level in three years. Analysts had expected a reading of 104.

Given that consumer activity accounts for approximately 67% of overall economic activity, this decline confirms worsening economic conditions and suggests that we have already entered a recession. This is why the Federal Reserve implemented a more aggressive 0.5% interest rate cut last week, rather than the anticipated 0.25%. To me, their actions represented an emergency measure.

While traders welcomed the Fed’s aggressive stance, I anticipate increased volatility and a potential disruption of the bullish trend in the coming months. Keep an eye on our Trend Tracking Indexes (section 3) for further developments.

China introduced a series of economic stimulus measures, including rate cuts, which positively impacted their stock market. However, the US and European markets showed little reaction.

The dollar weakened, Bloomberg’s Business Cycle Indicator declined sharply, and expectations for three more rate cuts in 2024 increased.

Gold gained 1.36%, approaching the $2,700 level. The most shorted stocks experienced wild swings but ended unchanged, bond yields retreated from mid-session highs, and crude oil recovered from the previous day’s drop.

Bitcoin moved towards $64,000, the upper end of its recent trading range.

With China’s recent monetary stimulus and global liquidity now comparable to the S&P 500, can we expect further upside potential, possibly leading to a blow-off top?

Read More

Economic Indicators And Election Risks Loom Over Market Gains

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

  1. Moving the market

The markets continued to build on last week’s rally, driven by the Fed’s 0.5% interest rate cut, the first in four years. Initially, the indexes fluctuated, but the S&P 500 managed a weekly gain of 1.4%, while the Dow reached a new all-time high.

However, the usual array of economic indicators remains a wildcard, potentially derailing hopes for a soft landing, particularly in the labor markets. Additionally, election risks loom large.

Fed President Goolsbee attempted to bolster market sentiment today, stating that the Fed is now able to ease monetary policy aggressively as inflation trends lower. Despite this, the Fed seems unaware that the bulk of inflationary pressures are still ahead. Goolsbee even predicted “a lot” of interest rate cuts over the next year if current economic conditions persist.

The major indexes saw modest gains, but crude oil took a hit for no apparent reason, though it held above the $70 level. Small Caps underperformed, while the Dow and S&P 500 closed at new highs.

Bond yields fluctuated and ended nearly unchanged, the dollar remained flat after an early bounce, gold climbed modestly, and Bitcoin briefly topped $64.5k before returning to its previous level.

Meanwhile, stocks and bonds continue to diverge, making me ponder how long this trend can persist.

Read More

ETFs On The Cutline – Updated Through 09/20/2024

Ulli ETFs on the Cutline Contact

Do you want to know which ETFs are hot and which ones are not? Then you need my High-Volume ETF Cutline report. It tells you how close or far each of the 311 ETFs I follow is from its long-term trend line (39-week SMA). These are the ETFs that trade more than $5 million a day, so they are not some obscure funds that nobody cares about.

The report is split into two parts: The winners that are above their trend line (%M/A), and the losers that are below it. The yellow line is the line of shame that separates them. You can see how many ETFs are in each group and how they have changed since the last report (260 vs. 271 current).

Take a peek:

The HV ETF Master Cutline Report

If you are confused by some of the terms we use, don’t panic. I have a helpful Glossary of Terms for you.

If you want to learn more about the Cutline method and how it can make you rich (or at least less poor), read my original post here.

ETF Tracker Newsletter For September 20, 2024

Ulli ETF Tracker Contact

ETF Tracker StatSheet          

You can view the latest version here.

GOLD HITS NEW RECORD HIGH, BITCOIN RALLIES TO 1-MONTH HIGHS

[Chart courtesy of MarketWatch.com]

  1. Moving the market

After yesterday’s significant rally, which followed Wednesday’s sudden midday reversal, the markets cooled off today, entering a consolidation phase due to the largest September option expiration on record.

Despite traders’ enthusiasm about the Fed’s aggressive 0.5% rate cut, marking a reversal in interest rate policy, volatility is likely to persist amid ongoing uncertainty about economic conditions, the new easing cycle, and the upcoming elections.

In corporate news, FedEx’s shares plummeted 13% after the company slashed its full-year earnings outlook and revenue guidance, signaling economic challenges. Conversely, Nike surged 7.5% on the announcement that its current CEO will step down.

Despite today’s modest pullback, the major indexes remain near record levels, as do home prices, alongside improvements in macroeconomic data. The Fed has confirmed the economy’s strength and anticipates a soft landing. However, their latest policy decision suggests a crisis, creating more questions than answers.

The most shorted stocks roundtripped, while the MAG7 basket continued to face overhead resistance. Utilities outperformed, with XLU gaining an impressive 2.65% for the day.

Bond yields were mixed for the week, with the 10-year yield inching higher. The dollar ended unchanged, while crude oil rebounded from its 3-year lows.

Bitcoin performed well over the last five trading days, rallying towards $64k and closing at 1-month highs. Gold soared to a new record high today, with the precious metal eyeing the $3k level.

As I have repeatedly noted, increasing inflation remains a significant concern, raising questions about whether we might revisit the economic turmoil of the 1970s.

Read More

Weekly StatSheet For The ETF Tracker Newsletter – Updated Through 09/19/2024

Ulli ETF StatSheet Contact

ETF Data updated through Thursday, September 19, 2024

How to use this StatSheet:

  1. Out of the 1,800+ ETFs out there, I only pick the ones that trade over $5 million per day (HV ETFs), so you don’t get stuck with a lemon that nobody wants to buy or sell.
  1. Trend Tracking Indexes (TTIs)

These are the main indicators that tell you when to buy or sell Domestic and International ETFs (section 1 and 2). They do that by comparing their position to their long-term M/A (Moving Average). If they cross above, and stay there, it’s a green light to buy. If they fall below, and keep going, it’s a red light to sell. And to make sure you don’t lose your shirt if things go south, I also use a 12% trailing stop loss on all positions in these categories.

  1. All other investment areas don’t have a TTI and should be traded based on the position of each ETF relative to its own trend line (%M/A). That’s why I call them “Selective Buy.” In other words, if an ETF goes above its own trend line, you can buy it. But don’t forget to use a trailing sell stop of 12%, or less if you’re feeling nervous.

If some of these words sound like Greek to you, please check out the Glossary of Terms and new subscriber information in section 9.

  1. DOMESTIC EQUITY ETFs: BUY— since 11/21/2023

Click on chart to enlarge

This is our main compass, the Domestic Trend Tracking Index (TTI-green line in the above chart). It has broken above its long-term trend line (red) by +8.69% and is in “Buy” mode as posted.

Read More