Major Indexes Climb As PPI Rises Modestly, Traders Eye CPI And Nvidia Earnings

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

  1. Moving the market

The major indexes experienced an upward climb as the Producer Price Index (PPI) increased by only 0.1% last month, compared to the anticipated 0.2% rise for July, which would have matched the previous month’s increase.

This modest rise in PPI provided hope for those advocating for a dovish shift in Federal Reserve policy. However, it also raised concerns about potential negative impacts on corporate profitability and, consequently, stock prices.

Despite these concerns, traders remained optimistic ahead of the more significant Consumer Price Index (CPI) report due tomorrow, driving the broad market higher. The CPI is expected to show a 0.2% increase, following a 0.1% decline in June. An outcome in line with expectations could bring temporary stability to the markets after last week’s volatility.

Hedge funds played a crucial role in the market’s recovery by buying into the selloff, helping major indexes recover from significant losses and reducing downside risk for the time being. Nevertheless, I expect volatility to persist due to the uncertain outlook of the US economy and the upcoming Presidential elections.

The dollar index fell to its lowest level in four months, while the MAG 7 stocks continued their recovery, aided by another short squeeze that has now erased approximately 50% of last week’s decline.

Bond yields also slipped, with the 2-year yield dropping below the 4% mark as rate-cut expectations increased. Bitcoin regained its footing, reaching the $61.5k price point, while crude oil prices dipped. Gold showed moderate gains and remained near its record highs.

Traders are eagerly awaiting tomorrow’s CPI report, but equally important and potentially market-moving will be Nvidia’s earnings report.

Continue reading…

2. Current “Buy” Cycles (effective 11/21/2023)

    Our Trend Tracking Indexes (TTIs) have both crossed their trend lines with enough strength to trigger new “Buy” signals. That means, Tuesday, 11/21/2023, was the official date for these signals.

    If you want to follow our strategy, you should first decide how much you want to invest based on your risk tolerance (percentage of allocation). Then, you should check my Thursday StatSheet and Saturday’s “ETFs on the Cutline” report for suitable ETFs to buy.

    3. Trend Tracking Indexes (TTIs)

    The session began on a positive note, thanks to a Producer Price Index (PPI) report that exceeded expectations. This optimistic data set the stage for bullish market sentiment, propelling the market upwards.

    The rally was widespread, and our TTIs reflected this momentum, demonstrating a solid advance across the board.

    This is how we closed 08/13/2024:

    Domestic TTI: +4.42% above its M/A (prior close +3.24%)—Buy signal effective 11/21/2023.

    International TTI: +3.53% below its M/A (prior close +2.18%)—Buy signal effective 11/21/2023.

    All linked charts above are courtesy of Bloomberg via ZeroHedge.

    ———————————————————-

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    Gold Soars, Bitcoin Whipsaws: Market Awaits Inflation Numbers

    Ulli Market Commentary Contact

    [Chart courtesy of MarketWatch.com]

    1. Moving the market

    Ahead of key inflation data points, the markets fluctuated but maintained a somewhat bullish sentiment. The Dow showed the most weakness, lagging the S&P 500 and Nasdaq. Nvidia’s 2% surge helped the Nasdaq take the lead.

    Wednesday’s consumer price index (CPI) report for July will be crucial. Any improvement could raise hopes that the Federal Reserve might soften its interest rate policy in their September meeting. Conversely, a worsening CPI could have a similar negative impact to the recent weak payrolls report, which sent the markets into a tailspin.

    Despite the major indexes ending last week on a down note, a few rebounds minimized losses. However, concerns about an economic slowdown persist, as indicated by various metrics. This suggests that we have not seen the end of the market’s turbulent swings. Relief rallies will only be possible if economic data holds up—and that’s a big if.

    The S&P 500 experienced wild swings despite stable bond yields, which slipped throughout the session. The 2-year bond found support at the 4% level. Rate-cut expectations rose for 2024 but remained flat for 2025.

    Gold, on the other hand, soared towards record highs, while crude oil followed suit due to increased tensions in the Middle East. Commodities advanced along with the dollar, but Bitcoin was volatile, fluctuating between $58,000 and $60,000.

    With the Producer Price Index (PPI) due tomorrow and the CPI on Wednesday, today’s calm session may come to an end if these numbers deviate from expectations.

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    ETFs On The Cutline – Updated Through 08/09/2024

    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 (239 vs. 245 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 August 9, 2024

    Ulli ETF Tracker Contact

    ETF Tracker StatSheet          

    You can view the latest version here.

    INVESTOR VOLATILITY: EQUITIES UNLOADED AS MONEY MARKET ASSETS HIT RECORD HIGH

    [Chart courtesy of MarketWatch.com]

    1. Moving the market

    After yesterday’s strong comeback session, upward momentum slowed, but traders and algorithms continued to push the indexes higher, erasing most losses from earlier in the week.

    This recovery followed Monday’s steep global sell-off, triggered by three key events: last Friday’s disappointing jobs data, uncertainty about the Fed’s anticipated rate-cutting timeline, and the unwinding of the Japanese yen carry trade.

    Despite these efforts, the major indexes remain below last Friday’s close, though by a much smaller margin than a few days ago. Consequently, the S&P 500 and the Nasdaq have now recorded their fourth consecutive losing week.

    Historically, equities have benefited from the “bad news is good news” scenario, where negative economic news increased the likelihood of the Fed loosening its grip on rates. However, this dynamic seems to have shifted, as the economy has weakened, and bad news now negatively impacts the markets. It appears that positive news is now necessary for equities to move higher.

    The most shorted stocks were squeezed higher after Monday’s collapse, while the MAG7 basket, after dropping 8%, entered recovery mode but did not reach the breakeven point. Bond yields fluctuated but ended higher, rate-cut expectations fell after Monday’s surge, and the dollar slipped.

    Gold rebounded over the last two days, recapturing its $2,400 level but closed slightly lower for the week. Oil prices dipped and then rebounded to their $77 level from a low of $72, while Bitcoin experienced a volatile week, initially plunging but then recovering towards the $62k level.

    This volatility clearly took a toll on investors, who unloaded equities and sent total money market assets to a new record high. In the current economic environment, taking some chips off the table seems wise.

    However, we’ll have to wait and see if the adage “he who panics first, panics best” will hold true once again.

    Read More

    Weekly StatSheet For The ETF Tracker Newsletter – Updated Through 08/08/2024

    Ulli ETF StatSheet Contact

    ETF Data updated through Thursday, August 8, 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 +3.56% and is in “Buy” mode as posted.

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    Bears Take Control: Dow Suffers Worst 5-Day Start In Six Years

    Ulli Market Commentary Contact

    [Chart courtesy of MarketWatch.com]

    1. Moving the market

    After yesterday’s comeback session, bullish sentiment persisted in the markets as traders attempted to recover some of the recent losses. However, the bears ultimately took control, causing major indexes to reverse and close in the red. The Dow experienced its worst five-day start to a month in six years.

    The tech sector failed to maintain its early rally, with mega-cap stocks all posting losses exceeding 2%. Notably, Super Micro Computer plummeted by approximately 20% due to earnings misses, followed by Airbnb, which saw a 15% decline.

    Although yesterday’s rebound provided some relief and lifted all 11 sectors of the S&P 500, its sustainability remains uncertain. We are navigating tumultuous times, with unresolved issues such as Black Monday’s selloff, banking, debt, and deficits looming in the background.

    Key support levels were breached, with the S&P 500 testing its 100-day moving average but falling below it as bearish sentiment prevailed. The index remains 3.65% away from its 200-day moving average, and if this level is breached, it could signal the end of the bull market.

    Bond yields rose following a disappointing 10-year auction, with the 10-year yield hovering around 4%. Rate-cut expectations for 2024 remained flat, crude oil prices rallied, and the dollar saw moderate gains.

    Gold dipped slightly, while Bitcoin surged towards the $58,000 level but failed to reach it and subsequently reversed. Commodity prices have been declining, which, according to this chart, has dragged down equities.

    Is this a warning sign of what’s to come?

    Continue reading…

    2. Current “Buy” Cycles (effective 11/21/2023)

    Our Trend Tracking Indexes (TTIs) have both crossed their trend lines with enough strength to trigger new “Buy” signals. That means, Tuesday, 11/21/2023, was the official date for these signals.

    If you want to follow our strategy, you should first decide how much you want to invest based on your risk tolerance (percentage of allocation). Then, you should check my Thursday StatSheet and Saturday’s “ETFs on the Cutline” report for suitable ETFs to buy.

    3. Trend Tracking Indexes (TTIs)

    Wall Street underwent a dramatic shift in fortunes as an early rally abruptly reversed course, leading to a disappointing close with major indexes ending in the red.

    Traders were caught off guard by this sudden downturn.

    Our TTIs presented a mixed scenario: while the International TTI showed a slight gain, the Domestic TTI edged closer to a critical threshold that could soon trigger a “Sell” signal. If you are tracking these developments, it’s essential to stay tuned for the latest updates.

    This is how we closed 08/07/2024:

    Domestic TTI: +1.72% above its M/A (prior close +2.44%)—Buy signal effective 11/21/2023.

    International TTI: +0.81% below its M/A (prior close +0.26%)—Buy signal effective 11/21/2023.

    All linked charts above are courtesy of Bloomberg via ZeroHedge.

    ———————————————————-

    WOULD YOU LIKE TO HAVE YOUR INVESTMENTS PROFESSIONALLY MANAGED?

    Do you have the time to follow our investment plans yourself? If you are a busy professional who would like to have his portfolio managed using our methodology, please contact me directly to get more details.