ETFs On The Cutline – Updated Through 12/13/2024

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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 (252 vs. 205 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 December 13, 2024

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ETF Tracker StatSheet          

You can view the latest version here.

STAGFLATION FEARS RESURFACE AMID RISING INFLATION AND BOND YIELDS

[Chart courtesy of MarketWatch.com]

  1. Moving the market

The tech sector saw modest gains, with the Nasdaq achieving its fourth consecutive week of growth. However, the S&P 500 and the Dow both experienced slight losses. As we near the end of 2024, the S&P 500 has recorded its best year-to-date performance since 1997.

Broadcom significantly bolstered the tech market, reaching a $1 trillion market cap and surging over 21% after reporting fiscal fourth quarter adjusted earnings that exceeded expectations, largely due to a substantial increase in AI revenue. The Mega-Cap tech basket also saw gains for the third consecutive week, despite a late-session sell-off.

Concerns about stagflation resurfaced today as inflation began to rise and the Citi Economic Surprise Index declined. Traders now believe there is nearly a 100% chance of another 0.25% rate cut next week.

Despite the Federal Reserve’s dovish outlook, bond yields have been rising rapidly, which has had a neutral impact on equities so far. The dollar continued its upward trend, marking its sixth consecutive day of gains, while gold maintained its weekly gains despite a pullback today.

Bitcoin ended the week above $102,000, finding support at the $100,000 level throughout the session. Crude oil performed well, rising on four out of five days due to increased geopolitical tensions.

Inflation remains a significant concern that could disrupt even the best-laid plans. This chart shows that the money supply has been increasing for about 18 months, suggesting that it is only a matter of time before CPI, PPI, and import/export prices accelerate.

The exact timing, however, remains uncertain.

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Weekly StatSheet For The ETF Tracker Newsletter – Updated Through 12/12/2024

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ETF Data updated through Thursday, December 12, 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 +7.14% and is in “Buy” mode as posted.

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Hotter-Than-Expected PPI Report Sends Markets Tumbling

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[Chart courtesy of MarketWatch.com]

  1. Moving the market

Following yesterday’s CPI report, traders were met with the release of the Producer Price Index (PPI) this morning, which showed a hotter-than-expected 0.4% price increase last month, compared to the anticipated 0.2%.

This year-over-year rise pushed prices up by 3.0%, the highest since February 2023, with food costs leading the surge, rising at their fastest pace since November 2022. The core PPI also saw a significant year-over-year increase to 3.4%, marking its worst performance since February 2023.

As a result, the major indexes tumbled, unable to build on the previous day’s gains. Despite this, traders remain optimistic that the Federal Reserve will proceed with a 0.25% rate cut in December, citing other recent inflation data that has shown positive trends. However, surging debt and deficits remain a concern.

The US Inflation Data Surprise Index has been climbing since the Fed began its rate-cutting cycle, while the US Macro Surprise Index has declined amid rising jobless claims.

Consequently, the dollar continued its upward trajectory, while stocks, cryptocurrencies, bonds, and gold all took a hit for the day.

Bitcoin briefly climbed above $102,000 early in the session but fell back below the $100,000 mark. Bond yields rose, gold retreated but held its $2,700 level, and crude oil experienced volatility, ending the session slightly in the red.

Will this week’s data points influence the Fed’s upcoming decision?

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Gold And Bitcoin Rally Despite Rising Bond Yields And Dollar

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

  1. Moving the market

The latest inflation readings provided a boost to the markets, with the S&P 500 and Nasdaq achieving solid gains, while the Dow lagged. The Consumer Price Index (CPI) met expectations, showing a 0.3% rise from October and a 2.7% increase year-over-year. The Federal Reserve’s preferred measure, the core CPI, which excludes volatile food and energy prices, also rose by 0.3% for the month and 3.3% year-over-year.

Although this data indicated a faster pace than the previous month, traders speculated that it wasn’t high enough to prevent the Fed from cutting rates later this month, with the odds of a rate cut now at 99.9%.

Despite the anticipation of rate cuts, bond yields surged as prices dropped, while other assets like stocks, gold, the dollar, crude oil, and cryptocurrencies remained bullish.

The mega tech sector reached a new record high, gaining in 11 of the past 13 days. The dollar advanced for the fourth consecutive day, which typically would have negatively impacted gold, but the precious metal rallied by nearly 1.3% to close above $2,750.

Bitcoin also spiked above $102,000, and crude oil reclaimed its $70 level, closing at a two-week high.

While traders have priced in a 0.25% rate cut for December, expectations for 2025 have significantly decreased, from six 0.25% cuts three months ago to just two for the entire year.

This makes me ponder: How will the markets respond to these changing expectations, especially since steadily rising rate cut expectations have been a key driver of the current equity bull market?

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Market Wavers Amid Seasonal Softness And CPI Anticipation

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

  1. Moving the market

Today, the traditional seasonal softness of mid-December persisted, with major indexes fluctuating without clear direction and ultimately closing in the red, despite a surge in small business optimism.

An early rally in the Mega-Tech sector hit a ceiling, reversed, and erased initial gains, making the Nasdaq the biggest loser of the day. Additionally, the most shorted stocks fell again, wiping out last Friday’s advances.

Bond yields climbed, and the dollar rallied for the third consecutive day. Bitcoin tumbled but managed to bounce off yesterday’s lows, while gold maintained its upward momentum, reclaiming the $2,700 level.

Traders are now focused on tomorrow’s CPI report, which could significantly influence the Federal Reserve’s interest rate policy at its December 17-18 meeting.

Expectations are for a headline inflation increase of +0.3% for November and +2.7% over the past 12 months. Any softening of the CPI data could revive equity bulls, while worsening inflation data would give bears the upper hand.

Which outcome will we see?

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