ETF Tracker Newsletter For November 1, 2024

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ETF Tracker StatSheet          

You can view the latest version here.

AMAZON AND INTEL LEAD MARKET REBOUND AMID DISAPPOINTING JOBS REPORT

[Chart courtesy of MarketWatch.com]

  1. Moving the market

Amazon led today’s market rebound, surging over 6% thanks to its ad business and cloud services exceeding expectations. Intel also contributed significantly, jumping nearly 8% after surpassing forecasts and issuing strong guidance. These gains helped erase the negative sentiment from previous earnings disappointments.

Despite a disappointing jobs report, the bullish tone set by these tech giants remained unshaken. The economy added only 12,000 jobs in October, far below the estimated 100,000. In fact, the number turns negative at -28,000 when excluding newly created government jobs. This marks the weakest job creation level since late 2020, potentially reflecting a more accurate economic reality as past reports have often been revised.

Bond yields underwent a volatile session, with the 10-year yield starting flat, then selling off, and finally rallying to close at 4.38%, its session high. This volatility impacted major indexes, with the S&P 500 and Nasdaq ending the week as the biggest losers.

The dollar initially tumbled but recovered to close higher. Gold had a tumultuous week, hitting a new record on Tuesday before succumbing to profit-taking. Bitcoin followed a similar pattern, closing slightly higher for the week.

With the upcoming election next Tuesday, market volatility is bound to pick, despite Wall Street viewing the “Trump trade” as favorable.

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Weekly StatSheet For The ETF Tracker Newsletter – Updated Through 10/31/2024

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ETF Data updated through Thursday, October 31, 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 +5.27% and is in “Buy” mode as posted.

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Inflation Concerns And Volatility Mark End Of October Trading

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

  1. Moving the market

The major indexes faced early declines as disappointing quarterly reports from two tech giants dampened any bullish sentiment. Microsoft’s shares fell over 5%, while Meta slipped 2.2% due to missed user growth expectations and a warning of significantly increased expenditures next year.

Throughout the week, mega-cap earnings painted a mixed picture. Alphabet saw a nearly 3% rise on Wednesday, but AMD plummeted over 10% following disappointing guidance. Investors are now eagerly awaiting reports from Apple and Amazon, which are due after the market closes today.

The Federal Reserve’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) index, came in slightly hotter than expected for September at 2.7% versus the anticipated 2.6%. The headline PCE rose 0.2% month-over-month, bringing the year-over-year PCE down to 2.1%, its lowest since February 2021. Overall, these figures were in line with estimates.

Increased volatility was evident on this last day of October, a month historically known for significant downside surprises. Today’s sell-off pushed the S&P 500 into the red for the month, albeit by a modest 1%, with all major indexes experiencing losses.

Inflation concerns were prominent, as the Bloomberg Economic Inflation Data Surprise index accelerated after a September downturn, leading to a slower pace of rate cuts.

The Nasdaq led today’s downturn, with all Mag7 stocks slipping. For the month, the basket surrendered nearly all gains, unsurprising given the spike in bond yields, with the 10-year yield up 0.6%, contrary to the Fed’s expectations following a 0.5% rate cut.

This anomaly extended to the mortgage market, where rates soared above the critical 7% level in October, despite the Fed’s rate cut.

The dollar also surged higher, and interestingly, gold followed suit, gaining for the eighth month out of the last nine and setting several record highs. This suggests that inflation fears remain significant, and the Fed’s aggressive cut may have been a policy misstep.

Despite today’s weakness, Bitcoin had its best month since May, rallying close to its record highs near $74,000 yesterday, supported by record BTC ETF inflows during October. Oil prices, after an early October rally, lost momentum but managed to close in the green over the past two days.

With the aggressive Fed cut leading to various unintended consequences, the USA’s sovereign risk of default has surged, unsettling traders as we move into November.

Do we need to brace for impact?

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Gold And Bitcoin Show Resilience Amid Market Turbulence

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

  1. Moving the market

Early in the trading session, bullish sentiment dominated despite a flood of mixed earnings results, with more reports expected from major tech companies.

However, this optimism was short-lived, as the major indexes eventually succumbed to bearish pressures, relinquishing their gains, and closing in the red.

Alphabet set a positive tone by surpassing expectations, boosting its share price by approximately 6%. In contrast, chipmaker AMD disappointed investors, leading to a 10% drop in its stock. Super Micro had an even worse day, with its stock plummeting by 32%, while Caterpillar also underperformed, losing 4% of its value.

As the market closed, anticipation grew for the earnings reports from tech giants Meta and Microsoft, with Apple and Amazon scheduled to release their results the following afternoon.

On the economic front, the latest third-quarter GDP figure showed a 2.8% annualized increase, falling short of economists’ expectations of a 3.1% rise.

However, the ADP payroll report provided a silver lining, revealing the highest level of private job creation in a year. Additionally, pending home sales surged by 7.4% month-over-month, marking the largest jump since June 2020.

Despite the mixed market environment, gold remained resilient, briefly touching the $2,800 level before retreating. Bond yields experienced another turbulent session, with some traders viewing the Fed’s 0.5% rate cut as a potential policy misstep.

The dollar had a volatile day, ultimately closing lower, while Bitcoin, despite coming off its highs, found solid support around $72,000. Oil prices rebounded but continued to drift below recent highs.

It was a volatile session, and I expect to see more of that as we approach election time.

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Choppy Markets Expected With Election Approaching; Gold And Bitcoin Soar

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

  1. Moving the market

As we approach a series of major corporate earnings releases in the coming days, bond yields continued their upward trajectory, reaching their highest levels since July.

Despite this, the major indexes showed little movement early this morning. With only five trading days remaining before the US presidential election, market volatility could increase, potentially leading to more choppiness. Today, the Dow slipped into the red, while the S&P 500 and Nasdaq managed to close in the green.

Bond yields showed significant fluctuations, with the 10-year yield pulling back slightly by the close, yet still rebounding to its July highs.

Gold surged, gaining 1.05% and setting a record, while Bitcoin also reached a new all-time high. The MAG7 stocks closed higher ahead of their earnings reports, whereas the most shorted stocks declined after three consecutive days of gains. The dollar remained unchanged.

The global money supply appears to be supporting Bitcoin’s potential for further gains, as indicated by recent charts.

Could we be on the verge of seeing Bitcoin reach the much-anticipated $100,000 mark?

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Bitcoin Surges Towards $70,000 Amid Market Volatility And Election Uncertainty

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

  1. Moving the market

This morning, crude oil prices plummeted by over 5% following an Israeli airstrike on Iran that notably avoided sensitive oil and nuclear facilities.

This unexpected development contributed to a jump in the major indexes, buoyed by the easing geopolitical tensions and the anticipation of upcoming mega-cap technology earnings. These earnings, coupled with the steadily improving Citi Economic Surprise Index, are expected to sustain the market’s upward momentum.

Traders are gearing up for the busiest week of the third-quarter earnings season, which coincides with the Presidential election on November 5. Five of the MAG7 companies—Alphabet, Microsoft, Meta, Apple, and Amazon—are set to release their earnings reports. Given their high valuations, these companies must meet expectations to prevent a potential sell-off.

On the economic front, this week is packed with significant events, including the PCE index release on Thursday, a preliminary reading of the third-quarter GDP, and the potentially market-moving jobs report on Friday.

Last week’s short squeeze continued to drive Small Caps higher, although the MAG7 basket saw minimal gains. Bond yields experienced volatility, with the 10-year yield surpassing the 4.27% mark.

Meanwhile, the dollar and gold ended the session unchanged, but Bitcoin found support and raced towards the $70,000 mark.

Despite the prevailing uncertainty surrounding the election, bond yields appear to have settled on an outcome, as indicated by the latest charts.

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