ETF Tracker Newsletter For February 11, 2022

Ulli ETF Tracker Contact

ETF Tracker StatSheet          

You can view the latest version here.

WALKING BACK THE TOUGH TALK

[Chart courtesy of MarketWatch.com]

  1. Moving the markets

It’s been a wild ride during the past 24 hours, since yesterday’s horrific CPI release, which indicated that we now have the highest inflation in 40 years. Not helping the markets were subsequent comments by the Fed’s mouthpiece Bullard, who called for 0.5% rate hike and an active sale of the Fed’s securities, thereby sparking panic, and helping the sell-off in the process.

Today, his remarks, which certainly added a sense of realism and urgency, were rebuked by various Fed speakers, and the media, as having been “immature” and “unprofessional.” So, damage control went into full swing and helped the major indexes early on to gain some footing, but in the end the sell-off persisted also due to war drums being beaten in the Ukraine.

Added ZH:

A sudden slap to the face seemed to shock investors from their multi-month stupor, waking to the reality that The Fed is serious this time about raising rates and withdrawing liquidity. That realization, considering US equity valuations have never been higher (combined with a collapse in US consumer confidence) have many wondering just where (or if) these two lines will ever converge…

Bond yields were caught on a high speed rollercoaster with the 10-year up 15 bps yesterday and down 13 bps today, as rumors of Russia’s imminent invasion made headline news. The US Dollar rode the news cycle up and down and ended the week a tad higher.

During all this turmoil, gold benefited and surged above the $1,860 level, its highest since Thanksgiving, according to ZeroHedge.

We are having a major power outage in my area, so I had to “wing” this report on my backup equipment.

Read More

Weekly StatSheet For The ETF Tracker Newsletter – Updated Through 02/10/2022

Ulli ETF StatSheet Contact

ETF Data updated through Thursday, February 10, 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 an 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 07/22/2020

Click on chart to enlarge

Our main directional indicator, the Domestic Trend Tracking Index (TTI-green line in the above chart) has now crawled above its long-term trend line (red) by +2.04% but still teeters on the edge of losing its “BUY” mode.

Read More

When All Else Fails, Start A Rumor

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

  1. Moving the markets

Starting a rumor is always a good way to keep a rally from falling apart, especially prior to one of the most eagerly awaited announcements, namely tomorrow’s CPI. Such was the case last night when, according to ZH, JPM heard “whispers of CPI below expectations,” which gave the bulls a running start.

That was enough of a spark to motivate traders and computer algos to front run tomorrow’s event in the hope that the CPI comes in lower, thereby giving the Fed less ammo to raise interest rates and keep the bullish dream alive.

The inflation data is estimated to show that prices rose 0.4% in January, for a 7.2% gain from one year ago, according to Dow Jones.

As a result of today’s rumor, bond yields, which had surged throughout this year, eased up with the benchmark 10-year coming off its recent high of 1.97% to end the session at 1.95%.

Of course, big rallies do not simply develop on their own, they need an assist, which came today via another short squeeze. As ZH explained, the most shorted stocks are up 4 straight days, over 9%, which is the biggest squeeze since late October.

The US Dollar slipped again, while gold showed some steadiness by being up 8 of the last 9 days.  

We will also find out tomorrow if the well-worn adage “buy the rumor, sell the fact” can still be applied.

Read More

Bullish Nibbling

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

  1. Moving the markets

After several breakout attempts over the past two trading sessions, the market finally found some footing that served as a base for today’s last hour lift-a-thon and pushed the major higher without a late-day sell-off ruining another effort.

For a change, the rally was broad and led by the Nasdaq with the Dow in hot pursuit. Today’s driver turned out to be corporate earnings with Harley-Davidson reporting a surprise for the fourth quarter. Traders focused on value in the tech sector and the financials, the latter of which have greatly benefited by a steady rise in bond yields.

Despite today’s advance, equities will likely remain in a holding pattern prior to Thursday’s CPI release. Added MarketWatch:

Wall Street is on edge watching how the Federal Reserve will react to the intensifying price pressures, with many investors eyeing Thursday’s consumer price index data release as a key event for markets this week. The inflation data is expected to show that prices rose 0.4% in January, for a 7.2% gain from one year ago, which would be the highest in almost 40 years.

10-year bond yields spiked above the crucial 1.95% level to end then session at 1.96% with the psychologically important 2% level in danger to be broken. All other maturities were higher across the board as well.

The US Dollar chopped around and closed marginally higher, while gold disregarded bond yields and a rising dollar and added 0.29% to solidify its position above the $1,800 level.

Most of today’s activity will not matter until the CPI is released on Thursday, the outcome of which will likely be determining future market direction. A better-than-expected reading will give the bulls more ammunition to ramp higher due to the then increasing likelihood of the Fed taking a more dovish stance towards future rate hikes. But the opposite will hold true as well.

Read More

Uncertainty Reigns

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

  1. Moving the markets

In an almost identical performance to Friday, the major indexes hugged their respective unchanged lines, before a mid-day breakout catapulted all 3 of them out of the red and into green.

Unfortunately, that bullish move did not hold, and we gagged into the close thus giving the bears the upper hand—again. The sell-off was fast and furious with the major indexes closing just about at the lows of the session, with only the Dow recovering to its unchanged line.

The tug-of-war between bulls and bears continued with traders being on edge about the latest earnings reports, as well as crucial US inflation data, with the January CPI due out on Thursday. Anxiety looms as to whether the December print will have worsened. Expectations are for a showing of 7.2% which, if true, would be the fastest gain since February 1982.

This week, we will be watching the latest report cards from about 70 S&P 500 companies. So far, we’ve seen a few earnings beats but also disappointing results from some of the heavyweights like Meta, PayPal and Netflix.

Bond yields went sideways and ended just about unchanged, while the US Dollar broke down and gave back all of Friday’s advance. That helped gold to continue its recent upswing with the precious metal gaining +0.80% for the day.

Read More

ETF Tracker Newsletter For February 4, 2022

Ulli ETF Tracker Contact

ETF Tracker StatSheet          

You can view the latest version here. Please note that due to a database error, I was not able to update this week’s StatSheet. I hope to have that issue resolved by next Thursday.

CHOPPING AND FLOPPING BUT GAINING FOR THE WEEK

[Chart courtesy of MarketWatch.com]

  1. Moving the markets

Another wild week on Wall Street had the major indexes advancing the first 3 trading days before the bears stepped in on Thursday and dampened some of that bullish enthusiasm, but it was not enough to wipe out the early gains. I took advantage of yesterday’s drop to add some new positions.

We seem to be at an inflection point with the tug-of-war between bulls and bears getting worse by the day with uncertainty increasing as to who will be the eventual winner. Traders were confused when looking at yesterday’s action, during which Amazon first plunged -7% and later surged nearly 20% due to great earnings and a positive outlook.

A balanced bond/stock portfolio got hammered with stocks puking and bond yields spiking and experiencing its worst day since February 2021, as ZH pointed out. The hangover from Facebook’s faceplant was still present this morning and pushed the markets down sharply, before bullish momentum resumed until a last minute wave of selling pulled the major indexes off their highs, with the Dow actually ending in the red.

Today’s eagerly anticipated jobs report turned out to be better than expected, and a huge beat, as 467k jobs were added, and the December’s numbers were massively revised higher. The entire report was suspect due to the 709k revisions, which ZH elaborated on:

If we exclude the impact of the annual revision, the January readings would have been -137K for labor force and -272K for household employment.

Bond yields continued to surge higher, which gave a boost to the Financials (XLF), which added +1.7% just for the session. March 2022 rate-hike expectations jumped, as the 10-year propelled to almost 1.92%.

The US Dollar index bounced off its lows, thanks to higher rates, yet gold held steady above its $1,800 level.

This current environment, be it the economy or the financial markets, is stuck at a fork in the road where anything is possible. Will stagflation be in the cards, as this graph seems to indicate? If so, watch out below.

Read More