1. Moving the markets

The markets shifted into overdrive supported by nothing more than news of a tentative deal that would keep the government from being shut down for the second time this year. Of course, as we all know, Trump’s border wall funding, or rather lack thereof, had been a stinging point between Republicans and Democrats.

The new but not final arrangement would include 55 miles of border fencing and involve far less money than Trump had demanded. The latest headline said that he was not happy with it, but did not yet reject it, but his approval is needed for this arrangement to go through.

To the computer algos, it did not matter whether there was a deal or not, they simply pumped the indexes higher. Throwing an assist was optimism (not fact) that the trade negotiations between China and the U.S. were progressing positively with more high-level discussions on deck for Thursday.

In the end, the major indexes closed solidly higher with the S&P 500 finally conquering his 200-day M/A and closing slightly above it. Our Domestic Trend Tracking Index (TTI) jumped and closed above its trend line for the 3^rd day in a row. The odds of a resumption of the prior bull market have increased, thereby generating a new ‘Buy’ for “broadly diversified domestic equity ETFs.”

Of course, you can never be sure if this the beginning of a race to take out the old highs or simply another head fake. To minimize the effects of the latter, here’s how I approach it in my advisor practice:

1. I will watch market activity for a couple of hours tomorrow morning to see if the trend remains steady, or if there is a giant sell-off in the making. If the major indexes are heading back south again, I will wait another day before making a commitment.
2. If sentiment is stable, I will look for partial exposure in low-volatility equity ETFs that have shown good performance and a better than average resistance to sell-offs.

If you follow along, you can also use my Thursday StatSheet to select ETFs that meet your risk tolerance. Once this ‘Buy’ signal is underway, I will update the 10 ETFs in the spotlight.

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1. Moving the markets

It was choppy trading session with the major indexes hugging their respective trend lines throughout the day. Neither big dips nor strong rallies were to be seen anywhere, as momentum in either direction was conspicuously absent.

Part of this uncertainty may have been caused by a winding down of the earnings season and nervousness about a flood of important data points scheduled to be published later this week. On deck, we have the U.S. CPI index and a look at the Q4 GDP in Germany, which is suspected to confirm a slowdown in activity.

This is followed by releases of trade, credit and CPI data in China, as well as GDP in the U.K., while the wait for Brexit goes on. Other headlines suggest a U.S. government shutdown as early as Friday, until which time we will still be facing the remainder of the earnings releases.

In the end, it was a mixed day that had no effect on our current view that we need to have more upside confirmation to generate a new domestic ‘Buy’ signal.

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