ETF Tracker Newsletter For December 23, 2022

Ulli ETF Tracker Contact

ETF Tracker StatSheet          

You can view the latest version here.

ANOTHER ROLLER COASTER RIDE

[Chart courtesy of MarketWatch.com]

  1. Moving the markets

While Wednesday’s rebound rekindled thoughts of a Santa Claus rally, those hopes were wiped out yesterday, when the markets got clubbed and surrendered all the prior day’s gains. The S&P 500 closed yesterday exactly at Wednesday’s level. Go figure…

Thursday, the markets threw a tantrum with Tesla plunging 11%. Hedge fund guru David Tepper threw more gasoline on the fire by commenting that traders should not ignore what the central bankers are saying:

I would probably say I’m leaning short on the equity markets right now because the upside/downside doesn’t make sense to me when I have so many Central banks telling me what they are going to do, what they want to do, what they expect to do.

Not helping matters was an unexpectedly hot 3.2% GDP number (above the 2.9% estimate), which was good news, as far as the economy is concerned, but bad news for equities, with traders fearing that the much hoped for Fed pivot remains nothing but wishful thinking.

Today, the bulls managed to tip the scales slightly in their favor but, given the losses for the past 5 trading days, the S&P and Nasdaq declined for a third straight week. Recession fears continue to batter sentiment, as the following mixed data points kept traders on edge:

No wonder that the markets are non-directional with weak numbers bringing recession fears and strong numbers creating Fed fears, as MarketWatch put it. Hard data and soft data seem to be converging, as ZeroHedge pointed out, which does not favor a soft landing.

Bond yields surged this week with the 10-year taking the lead by gaining 26 bps to close at 3.75%, while the US Dollar slipped, yet Gold ended the week unchanged after zig-zagging the entire December.    

If traders don’t step up to the plate and create some bullish momentum during the last 4 trading days of 2022, tech stocks will end up notching their 2nd worst December ever.

Have a very Merry Christmas!

Read More

Weekly StatSheet For The ETF Tracker Newsletter – Updated Through 12/22/2022

Ulli ETF StatSheet Contact

ETF Data updated through Thursday, December 22, 2022

Methodology/Use of this StatSheet:

1. From the universe of over 1,800 ETFs, I have selected only those with a trading volume of over $5 million per day (HV ETFs), so that liquidity and a small bid/ask spread are assured.

2. Trend Tracking Indexes (TTIs)

Buy or Sell decisions for Domestic and International ETFs (section 1 and 2), are made based on the respective TTI and its position either above or below its long-term M/A (Moving Average). A crossing of the trend line from below accompanied by some staying power above constitutes a “Buy” signal. Conversely, a clear break below the line constitutes a “Sell” signal. Additionally, I use a 12% trailing stop loss on all positions in these categories to control downside risk.

3. All other investment arenas do not have a TTI and should be traded based on the position of the individual ETF relative to its own respective trend line (%M/A). That’s why those signals are referred to as a “Selective Buy.” In other words, if an ETF crosses its own trendline to the upside, a “Buy” signal is generated. Here too, I recommend trailing sell stop of 12%, or less, depending on your risk tolerance.

If you are unfamiliar with some of the terminology, please see Glossary of Terms and new subscriber information in section 9.     

1. DOMESTIC EQUITY ETFs: BUY — since 12/01/2022

Click on chart to enlarge

Our main directional indicator, the Domestic Trend Tracking Index (TTI-green line in the above chart) has dipped back below its long-term trend line (red) by -1.39% but remains in “Buy” mode for the time being.

Read More

Bounce Back Wednesday

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

  1. Moving the markets

Upbeat earnings and robust consumer confidence data combined forces to pull the markets out of their doldrums and gave traders an excuse to push equities higher. Nike started things out by beating quarterly earnings and revenue expectations, as did FedEx with the company also announcing cost cutting plans.

Consumer Confidence surged in December (to 108.3 vs. 101 expected), as ZeroHedge posted, while inflation expectations tumbled to its lowest since August 2021. That put the bulls back in charge with nothing being able to stop today’s Ramp-A-Thon.

Not even horrific US Existing Home Sales, displaying their worst annual drop since 2008, could offset the bullish mood. However, the US Macro Surprise index showed the economy continuing to sink and the index has now reached its lowest point since early September.

Bond yields dropped early on, rebounded, and slipped into the close ending the session just about unchanged. The US Dollar continued yesterday’s sideways pattern and held steady, as did gold with the precious metal remaining above its $1,800 level.

With only a few trading days left in 2022, the major indexes look to be snapping a 3-year win streak to post their worst year since 2008. As MarketWatch pointed out, the Dow is down 8.2% for the year and 3.6% for this month, while the S&P 500 shed 18.6% and 5%, respectively. The Nasdaq plummeted 31.5% in 2022 and 6.6% in December.

It was not a good year for the Buy-and-Hold crowd.

Read More

Eking Out A Small Gain

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

  1. Moving the markets

It wasn’t an impressive performance, but at least the markets managed to snap a 4-day losing streak by eking out a tiny gain in the face of sharply rising bond yields. Traders tried to shake off a surprise rate hike by the Bank of Japan (BoJ) and resigned themselves to the idea of a waning year-end rally.

The global trading community was shocked when the BoJ announced a “widening of its cap” on the Japanese 10-year government bond yield thereby following the hawkish tone set by the ECB and the Fed.

The Japanese Yen shifted into rally mode after needing to be propped up in September and October, while the US Dollar was slammed. Gold was the beneficiary with the precious metal gaining a solid +1.70%.  

Of course, the BoJ’s hike immediately supported hopes, or wishful thinking, that we have now moved one step closer to the end of the hiking cycles, which would lessen bearish sentiment and lay the foundation for a new bull market.

On the other hand, the economic hits keep coming with today’s collapse of US Building permits of -11.2% MoM (vs. -2.1% expected) being the latest data point that clearly shows that a recession is in the making. As ZeroHedge added, YoY permits are down over 22%, the biggest drop since 2009.

US Bond yields rallied with the 10-year surging 21 bps to close at 3.69%.

I expect trading volume to slow down over the next three trading days, as we approach the Christmas holiday.

Read More

Hope For A Christmas Rally Is Fading

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

  1. Moving the markets

Friday’s sour mood about a worsening recession carried over into today’s session, with only the Dow managing to glimpse above its unchanged line, while the S&P 500 and Nasdaq never saw any green numbers. The major indexes have now closed lower for the 4th day in a row and are in the red for the month.

With the Fed now looking to hike the Federal Funds rate towards the 5.1% area, no matter what, traders have had to come to terms that this type of increase will worsen the recession and, by association, affect earnings negatively, which will cause stock prices to pull back.

On the economic side, there was only one data point of interest, and that was Homebuilder Confidence, which pretty much sealed the dominance of the bears for the day. The print was downright dismal, as the headline index dropped 2 points to 31, vs. expectations of a rally to 34, but there is still a long way to go to the downside to catch up with the Homebuyer confidence number.   

There was no news whatsoever to support any bullish movement, but traders and algos still have 4 days left to produce a Santa Claus rally, although right now, the odds are not that great.

Read More

ETFs On The Cutline – Updated Through 12/16/2022

Ulli ETFs on the Cutline Contact

Below, please find the latest High-Volume ETF Cutline report, which shows how far above or below their respective long-term trend lines (39-week SMA) my currently tracked ETFs are positioned.

This report covers the HV ETF Master List from Thursday’s StatSheet and includes 312 High Volume ETFs, defined as those with an average daily volume of more than $5 million, of which currently 88 (last report: 133) are hovering in bullish territory. The yellow line separates those ETFs that are positioned above their trend line (%M/A) from those that have dropped below it.

Take a look:                                                                   

The HV ETF Master Cutline Report

In case you are not familiar with some of the terminology used in the reports, please read the Glossary of Terms. If you missed the original post about the Cutline approach, you can read it here.