ETF Tracker Newsletter For December 6, 2024

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ETF Tracker StatSheet          

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SEASONAL TRENDS HINT AT POTENTIAL MARKET DOWNTURN NEXT WEEK

[Chart courtesy of MarketWatch.com]

  1. Moving the market

Traders viewed today’s jobs report as a “Goldilocks” scenario, where the data was better than expected but not so strong as to discourage the Federal Reserve from potentially cutting interest rates later this month. This morning, the odds of a rate cut increased to 88%.

In November, nonfarm payrolls rose by 227,000, surpassing the expected 214,000 and significantly improving from October’s modest gain of just 12,000. The unemployment rate edged up to 4.2%, aligning with current projections.

While this headline number impacts markets, it is likely to be revised, as has been the trend over the past year. Nevertheless, major indexes surged on the news, with the Nasdaq leading the charge and achieving a record close, while the Mega-Cap basket continued to gain.

Throughout the week, economic data generally fell short of expectations, which bolstered hopes for a rate cut. This dovish sentiment extended to the bond markets, where all yields declined over the week.

Bitcoin underwent its sixth consecutive week of gains, briefly surpassing the $100,000 mark for the first time before retreating to find support at $92,000, eventually rebounding to $102,000.

The dollar ended the week higher, while gold followed a similar trajectory but closed slightly lower.

Given the influence of seasonality on equities, we might see a downturn next week if historical patterns hold true.

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Weekly StatSheet For The ETF Tracker Newsletter – Updated Through 12/05/2024

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ETF Data updated through Thursday, December 5, 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 +9.02% and is in “Buy” mode as posted.

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Bitcoin Breaks $100k, Settles Below $98k In Volatile Session

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

  1. Moving the market

After yesterday’s strong gains, the markets took a breather today, with major indexes closing moderately lower. Small Caps suffered the most significant losses.

Last night, the much-anticipated event occurred when Bitcoin pierced the $100k level for the first time. Within minutes, it surged to $104k before leveling off slightly below that mark. During today’s session, Bitcoin slipped and settled around $98k.

Historically, such bullishness in Bitcoin has positively impacted the Nasdaq, but so far, the tech index has not reacted.

The latest first-time filings for jobless benefits rose by 9,000 to 224,000, higher than the estimated 215,000. On a positive note, continuous claims edged lower by 25,000 to 1.871 million.

Despite flat bond yields and a declining dollar, gold struggled to find footing and dropped by 0.82%. However, the Mega-Cap basket defied the overall market weakness and inched higher.

It was a quiet, directionless session ahead of tomorrow’s jobs report, an event that has the potential to catch traders off guard.

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Tech Stocks Lead Market Rally Amid Economic Optimism

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

  1. Moving the market

Equities began the session on a bullish note, with the S&P 500 and Nasdaq reaching new record highs.

Following yesterday’s mixed performance, the major indexes appeared to shift back into bullish mode. However, it remains uncertain whether we will see a repeat of the post-election surge.

Private payrolls, as reported by ADP, grew less than expected in November, with only 146,000 positions added compared to the anticipated 163,000. Additionally, the October surge of 233,000 jobs was revised down to 184,000. This will be followed by Friday’s November labor report, which could significantly impact the market.

Traders are also focused on Fed Chair Powell’s speech in New York this afternoon, which will be a moderated discussion.

The Fed’s Beige Book was released, indicating that the sluggish, flat, and declining conditions observed in September and November had reversed. This, combined with a strong jobs report on Friday, could be enough for the Fed to pause rate cuts for the foreseeable future.

This news propelled the markets into overdrive, with the major indexes achieving solid gains after some mid-day sideways movement. The Nasdaq led the charge, while Small Caps lagged.

The Mega-Cap tech basket surged to a new record high as bond yields retreated. The dollar came off its highs for the day and ended unchanged, while gold swung wildly but closed at the upper end of its recent trading range.

Bitcoin benefited from the nomination of a pro-digital asset SEC head and the fall of the French government, rising slightly above the $99,000 level.

Currently, there is a tug-of-war between investors who believe in the Santa Claus rally and those who remain skeptical after November’s stellar performance.

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Job Openings Surge In October, Markets Show Mixed Reactions

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

  1. Moving the market

The major indexes took a breather early on after a relentless climb over the past few months, with November standing out as the best performing month of the year.

Both the S&P 500 and Nasdaq hit record highs yesterday, continuing their strong post-election gains, with the S&P 500 up 4.6% and the Nasdaq up 5.2%. The Dow also saw a 6% increase since the election. However, Small Caps dropped sharply as the Nasdaq outperformed.

Despite initial bearish pressures, the S&P 500 and Nasdaq managed to eke out small gains by the end of the session. This came after South Korea reversed its martial law announcement, leading to a recovery in the Won currency and a bounce in the Korea ETF EWY from its early lows.

On the economic front, job openings in October were reported at 7.74 million, significantly higher than the expected 7.5 million, marking the largest increase in 14 months. We’ll have to wait and see what the revisions reveal in a few weeks.

Bond yields rose moderately, the Mega Tech basket approached its post-election highs, the dollar fluctuated without clear direction, and gold closed higher but gave back some early gains.

Bitcoin mirrored this pattern, initially surging on the Korean news before pulling back and finding support around the $95k mark. Crude oil outperformed, nearing the $70 level once again.

Will bullish sentiment remain strong enough to turn December into a repeat of November?

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Bitcoin Outshines Stocks With 38% Gain In November

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

  1. Moving the market

The S&P 500 and Nasdaq edged higher into record territory, while the Dow lagged after previously touching the 45,000 milestone.

Intel, AI server maker Super Micro, and Tesla all saw significant gains, propelling the Nasdaq to lead today’s rally. November was the best month of the year for both the Dow and the S&P 500, with gains of 7.5% and 5.7%, respectively.

Small Caps, despite a significant pullback in July, benefited from potential tax cuts proposed by Trump and surged more than 10% in November. However, Bitcoin, through the ARKB ETF that we own, outperformed all with a 38% gain for the month.

Because of its volatility, Bitcoin pulled back today, bouncing off the $95,000 level as it continues to pursue the $100,000 milestone.

With the Nasdaq in rally mode, it’s no surprise that the Mega Cap tech stocks advanced as well. Bond yields were mixed, with the 2-year yield tumbling after an early surge. The dollar recovered from its recent slide, while crude oil dropped but managed to defend its $68 level.

While retail investors are thrilled with the performance of the indexes, caution is advised as insiders are selling into this rally:

It’s crucial to have an exit strategy in place, as we appear to be in a blow-off phase.

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