Weekly StatSheet For The ETF Tracker Newsletter – Updated Through 02/07/2019

Ulli ETF StatSheet Contact

ETF Data updated through Thursday, February 7, 2019

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 7.5% trailing stop loss on all positions in these categories to control downside risk.

  1. 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 7.5% -10% 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: SELL — since 11/15/2018

Click on chart to enlarge

Our main directional indicator, the Domestic Trend Tracking Index (TTI-green line in the above chart) is now positioned below its long-term trend line (red) by -0.06% after having generated a new Domestic “Sell” signal effective 11/15/18 as posted.

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Global Growth Fears Stop Bullish Momentum

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]
  1. Moving the markets

Right after the opening bell, the major indexes took a dive as a cocktail of global risks kept traders occupied. The usual suspects, namely U.S.-China trade tensions, the U.K Brexit and a sharp slowdown in Chinese growth, combined to put the bulls on notice that all may not be well with this world and south we went.

Considering the strength of the recent bear market rally, the pullback was not significant, however, it could indicate that bearish forces could come into play again. Poor earnings and weak data out of Germany put their markets on a southerly course, as algos and traders desperately looked in vain for positive headlines. Concerns spread that the slowing growth in China has already affected the European Union.

In the end, the pullback was enough to change the position of our Domestic Trend Tacking Index (TTI), which had crawled above its long-term trend 4 days ago. Today’s market drop was sharp enough to push our index back below the line into bear market territory by a tiny margin (section 3). So, we’re on hold and will not take any action until a clear break to the upside has occurred again and is accompanied by some staying power.

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Equities Under Pressure

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]
  1. Moving the markets

I guess nothing can ever really satisfy the traders/algos on Wall Street, who constantly need to be fed a fresh dose of stimulus in order to maintain the bullish mood. Apparently, it’s not enough that the Fed threw in the towel by doing a U-turn with their interest rate policy and in the process becoming Wall Street’s lapdog.

So, much was expected from the State of the Union address in terms of new details on the economic agenda or a concrete solution to the China trade disagreements. With no specifics forthcoming, the markets slipped a bit with the major indexes closing in the red by a small margin for the first time in 6 sessions.

Technically speaking, the S&P 500 is facing stiff overhead resistance as it approaches its 200-day M/A. As of today, it’s only 12 points away from cracking this barrier and moving back onto the bullish side. For the second day in a row, the index was unable to make the break.

However, once it conquers that line, it’s not a guarantee that it will be free sailing from then on. As this chart shows (courtesy of Global Market Monitor), the last 3 times this occurred, it turned into a regrettable head fake that head the bears chomping at the bit.

To me, the markets seem out of touch with reality, especially when considering that earnings are one of the main economic drivers that attempt to justify the current lofty levels. Forward earning expectations continue to slip and have now crashed to a 6-month low. Go figure…

Our Trend Tracking Indexes (TTIs) retreaded a tad, but the Domestic one remains above its long-term trend line. A little more staying power is needed, before I will issue a new Domestic ‘Buy’ signal.

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A Whip-Saw Day But Bull Trend Strengthens

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]
  1. Moving the markets

One look at the chart tells the story. An early rebound failed miserably with the S&P 500 dipping back into the red, then recovering and closing at the early high of the session. All eyes are now on the 200-day M/A, which today acted as overhead resistance.

At 2,742 we are only some 4 points away from conquering that level, which Wall Street considers to be the return to the bullish theme. Our Domestic TTI has already crossed into bullish territory and, should momentum not change much over the next couple of days, will generate a new ‘Buy’ signal.

If the S&P 500 manages to crawl back above its line, it will have been the fastest V-shape recovery on record considering that only at Christmas the index was hovering in bear market territory, mostly defined as a drop of 20% or more off recent highs.

While this has been the best start to a year for the S&P 500 since 1987, as ZH points out, it has been the worst start for earnings expectations in 3 years. However, be that as it may, I am preparing to re-enter the markets and will post the exact entry date.

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Tech Leads The Way And Posts Solid Gains

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]
  1. Moving the markets

Despite a slow start, the major indexes picked up some steam and closed higher with technology leading the charge as the Nasdaq added +1.15%. Assisting the advance was a positive view of Alphabet’s (Google) upcoming quarterly report card and another round of earnings by some 97 members of the S&P 500.

The markets in general continued to benefit from the Fed’s latest dovish signal that interest rate hikes were on hold until further notice. As I posted before, this fact more than any other will contribute to further upward momentum in support of equities. Of course, the continued short-squeeze helped the bullish cause as well.

On deck I see possible additional market support in form of the China trades talks, which so far have been a headwind to equity markets. That could change in a hurry if some verifiable positive headlines about the March 1 deadline (increase in tariffs) show that a solution has been found and accepted by the warring parties.

With today’s action, our leading indicator, the Domestic Trend Tracking Index (TTI), has crawled above its trend line (see section 3) into bullish territory for the first time since 11/15/18. It’s now hovering at +0.36% above the line, and I need to see a little staying power before a new ‘Buy’ signal will be triggered.

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ETFs On The Cutline – Updated Through 02/01/2019

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 322 High Volume ETFs, defined as those with an average daily volume of more than $5 million, of which currently 111 (last week 84) 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.