ETF Data updated through Thursday, September 16, 2021
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 8% 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. Since these areas tend to be more volatile, I recommend a wider trailing sell stop of 8%-10% depending on your risk tolerance.
If you are unfamiliar with some of the terminology, please see Glossary of Termsand 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 rallied above its long-term trend line (red) by +7.45% and remains in “BUY” mode as posted.
An early purge in the markets was met with a subsequent surge, which propelled the major indexes back to their respective unchanged lines, but only the Nasdaq managed to score a green close.
Retail sales surprised by rising 0.7% MoM, which was exactly the opposite of expectation of a 0.8% MoM drop. Helping this enormous “beat” was a revision of the initial July estimate from a gain to a decline, which makes the validity of this current number questionable.
Meanwhile, the latest weekly unemployment insurance data revealed that 332k first-time claims were filed, a slightly worse number than the 320k expected.
Still, uncertainty about a host of issues affect the markets, which one analyst described like this:
The stress factors facing the market have not materially changed, including the Delta variant, earnings headwinds from supply chain and labor challenges, fiscal and monetary tailwind shifting to headwinds and bubbling concerns around China.
Dip buyers could not resist and got today’s rebound started assisted by another short squeeze, the combination of which wiped out most of the early losses.
The US Dollar Index spiked, as did Bond yields with the 10-year reaching the 1.33% level. As a result, as we’ve seen many times before, this double punch sent Gold reeling and back below its $1,800 level.
As Bloomberg shows in this chart, the S&P 500 seems to have gotten ahead of reality, namely the Fed’s balance sheet expansion, so a pullback would be in order. It could happen tomorrow during quadruple witching hour, when a huge number of options will expire, which is an event that can wreak havoc with the markets.
As a reminder, I will be out tomorrow, so there will be no market commentary. My regular posting schedule will resume on Monday.
Continue reading…
2. ETFs in the Spotlight
In case you missed the announcement and description of this section, you can read it here again.
It features some of the 10 broadly diversified domestic and sector ETFs from my HighVolume list as posted every Saturday. Furthermore, they are screened for the lowest MaxDD% number meaning they have been showing better resistance to temporary sell offs than all others over the past year.
The below table simply demonstrates the magnitude with which these ETFs are fluctuating above or below their respective individual trend lines (%+/-M/A). A break below, represented by a negative number, shows weakness, while a break above, represented by a positive percentage, shows strength.
For hundreds of ETF choices, be sure to reference Thursday’s StatSheet.
For this current domestic “Buy” cycle, here’s how some our candidates have fared:
Click image to enlarge.
Again, the %+/-M/A column above shows the position of the various ETFs in relation to their respective long-term trend lines, while the trailing sell stops are being tracked in the “Off High” column. The “Action” column will signal a “Sell” once the -8% point has been taken out in the “Off High” column. For more volatile sector ETFs, the trigger point is -10%.
3. Trend Tracking Indexes (TTIs)
Our TTIs pulled back a tad, as the major indexes dug themselves out of an early hole.
This is how we closed 09/16/2021:
Domestic TTI: +7.45% above its M/A (prior close +7.65%)—Buy signal effective 07/22/2020.
International TTI: +4.52% above its M/A (prior close +4.89%)—Buy signals effective 07/22/2020.
Disclosure: I am obliged to inform you that I, as well as my advisory clients, own some of the ETFs listed in the above table. Furthermore, they do not represent a specific investment recommendation for you, they merely show which ETFs from the universe I track are falling within the specified guidelines.
All linked charts above are courtesy of Bloomberg via ZeroHedge.
Despite a shaky start, the major indexes found support and managed to overcome the September doldrums, at least for this day. Bullish momentum surfaced with equities accelerating to the upside during the afternoon session, and all three indices closed the day with solid gains.
While the battle between Small Caps (VBK) and Value (RPV) continued unabated, both gained, but the latter outperformed the former by a 2:1 ratio. Helping to stabilize bullish sentiment early on was the Empire manufacturing index, which not only accelerated in August but also beat 18 consensus estimates.
Anxiety about the upcoming Debt ceiling discussions, were moved to the front burner again, yet did not hamper equities but pulled the US Dollar lower, while pushing bond yields higher with the 10-year closing at the 1.3% level.
This combination did not work well for Gold, which slipped and lost its $1,800 level again.
In the end, as Bloomberg charted here, inflation remains with us, with the Industrial Sector Surprise Index limping lower, which translates into the dreaded “S” word, namely Stagflation. Hmm, as Zero Hedge put it, that could be the Fed’s worst nightmare scenario.
Except for yesterday, we have seen the pattern of an early bump getting pounded in the afternoon during all last week. While Monday instilled some confidence in traders’ minds that the bullish meme is still alive, that mantra was smashed today with the major indexes spending most of the session below their respective unchanged lines.
Even a better-than-expected inflation report could not stop the bears from taking over and sending the indexes to another red close. Despite the downward trend during 6 out of the last 7 sessions, the losses were moderate and certainly not out of line given the relentless march higher during this year.
The CPI came in slightly below expectations at 0.3% MoM vs. 0.4% MoM expected and printed at 5.3% YoY, which was in line with forecasts. Still, this is a significant jump, despite one analyst calling it “continued easing in the inflation piece without deterioration in the economic outlook.” We’ll revisit that wishful thought next month.
There was no place to hide, as “red” was the dominant color of the session, with the Dow and Small Caps having their worst day since mid-July, as ZeroHedge posted, but “value,” as represented by RPG, had its own issues by giving back just about all of yesterday’s gains.
Bond yields plummeted with the 30-year heading to 6-week lows. The US Dollar index swan dived, reversed, and recovered all its early losses. Every bit of this uncertainty proved to be a boon for gold, with the precious metal not only gaining 0.68% but also climbing back above its $1,800 level.
With Friday’s quadruple witching hour (options expirations) on deck, it looks like volatility will be with us for a while.
For a change, an early rally maintained its momentum throughout the session, despite a temporary mid-day pullback, with two of the three major indexes finally eking out a gain, following five days of losses. The Nasdaq trailed and closed slightly in the red, after dancing around its unchanged line all day.
Small Caps dipped but “value” ripped, with RPV gaining a solid +1.56% after nibbling at its trailing sell stop last Friday.
Still, today’s bounce back was subdued and a far cry from convincing traders that the bullish theme is back on. After all, we are in the middle of one of the historically most volatile months, during which anything is possible. The S&P 500 was saved only by late-session bidding, which pulled the index out of the red.
Spraying to all fields:
Bond yields dropped, as nervousness over the upcoming debt ceiling debacle moved front and center.
The US Dollar bounced without clear direction but managed to hang on to modest gains.
Gold popped and dropped but ended slightly higher yet still short of recapturing its $1,800 level.
Inflation is here to stay, despite jawboning to the contrary, as the Commodity Spot Index rallied to a 10-year high.
This week’s posting schedule will be slightly different due to me being out of town on Friday. You can see the latest update here.
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 249 (last week 264) 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.
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.
