ETF Tracker Newsletter For April 13, 2018

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ETF Tracker StatSheet

https://theetfbully.com/2018/04/weekly-statsheet-for-the-etf-tracker-newsletter-updated-through-04-12-2018/

 ENDING THE WEEK WITH A WHIMPER

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

The major indexes came under pressure and surrendered early gains as initial reads on the upcoming earnings season disappointed. Expectations have been high about corporate performance maybe in part due to the fact that geopolitical anxieties have painted a distorted picture.

While three major banks showed some better than anticipated report cards today, equities headed south anyway and pushed the financial sector down (XLF -1.51%). Still for the week, the Dow gained 2% while the S&P 500 and Nasdaq added 2.1% and 3% respectively.

Headline news ping-pong was in full swing today including such topics as China trade wars, Comey, Rosenstein, Mueller, Syria, Russia and slumping consumer sentiment, which were all adding to the general confusion in the market place rather than providing much needed clarity.

But, these are the roller-coaster times we live in, so we will continue to focus on the only reality we have, which is the major direction of the markets via our Trend Tracking Indexes (TTIs). The trend remains bullish, and we will stay on board until the bears gain the upper hand.

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Weekly StatSheet For The ETF Tracker Newsletter – Updated Through 04/12/2018

Ulli ETF StatSheet Contact

ETF Data updated through Thursday, April 12, 2018

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: BUY — since 4/4/2016

Click on chart to enlarge

Our main directional indicator, the Domestic Trend Tracking Index (TTI-green line in the above chart) is positioned above its long-term trend line (red) by +1.48% after having generated a new Domestic Buy signal effective 4/4/2016 as posted.

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Military Tensions Weaken—Markets Rally

Ulli Market Commentary Contact

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

The tug-of-war continued today as talk, that a strike on Syria may not be immediately in the cards, de-escalated tensions and giving a bullish assist to equities. The 3 major indexes scored solid gains after yesterday’s losses.

Six out of the eleven primary S&P sectors gained led by Financials (XLF +1.75%) with Semiconductors (SMH +1.66%) taking second place.

While geopolitical concerns took center stage, Trump’s rhetoric softened from Wednesday’s “get ready Russia,” to Thursday’s “never said when an attack on Syria would take place. Could be very soon or not so soon at all!” In other words, he said absolutely nothing.

Besides the war mongering atmosphere, the markets still have trade sanctions with China to deal with and the upcoming earnings season, which is expected to be strong. In the meantime, the S&P has been dancing around its 200-day M/A successfully so far but has been trending sideways in a broad range.

In other words, we have some positives, negatives and a bunch of uncertainty, either of which will be able to affect market direction on any given day, hence the roller coaster environment. Should the negative factors overwhelm the positive ones, we may very well see our Trend Tracking Indexes (TTI) head south again, but it remains to be seen whether that downside momentum strengthens to a point where all-out “Sell” signals are being generated.

Stay tuned!

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Geopolitical Tensions Push Markets Lower

Ulli Market Commentary Contact

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

At least for one day, the U.S./China trade war battles were moved to the back burner, as geopolitical tensions dominated headline news, after tweets from President Trump that a military strike in Syria might be a possibility. That immediately ratcheted up verbal tensions with Russia, and the markets ended up being the fall guy by slipping into the close.

To me, most of this was just jawboning, after all, would you really want to announce an upcoming military strike? In any event, despite a mid-day attempt to conquer the unchanged line, downside momentum overwhelmed the bulls, and the major indexes closed modestly in the red.

Other data points had the CPI reports in line with expectations, while the minutes from the last Fed meeting included language suggesting that policy makers need to tap on the breaks of the economy. According to the Treasury, the government’s budget deficit was $209 billion in March, which was up 18% from the same month a year ago. Now that should have been headline news, but it was simply ignored. Go figure…

Interest rates slipped with the 10-year bond yield dropping 1 basis point to 2.79%. The US Dollar (UUP) continued its recent string of losses (-0.09%), while gold and crude oil bucked the trend by scoring solid gains.

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Soothing Trade-War Fears Propel Equities

Ulli Market Commentary Contact

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

Unlike yesterday, when an early rally petered out, today’s sharply higher opening turned out to be the real thing, as equities maintained their upward momentum throughout the session and into the close, thereby scoring some solid gains across the board.

Giving the assist were Chinese President Xi Jinping’s suggestions to adopt a less-aggressive stance in regards to trade, which were exactly the words the markets were dying to hear, and off to the races we went. Headlines about trade issues between the two countries have been the biggest market influencer as of late driving stock markets sharply lower as well as contributing to massive rebounds.

Today’s gains were broad with 9 of the 11 S&P sectors closing green as Energy (+3.3%) and tech (+2.5%) occupied the top spots. The major indexes also managed to close up for 5 out of the last 6 sessions.

Apparently, there was nothing on the horizon to stop today’s market exuberance from spreading, as even Zuckerberg’s testimony in front of Congress was interpreted as positive with FB rallying +4.5% on the day. Yesterday’s fly in the ointment, namely the FBI’s raid on Trump’s personal lawyer, had no effect on market momentum.

While trade jawboning is sure to go on for months, and keep a cloud of uncertainty over the markets, I think that a less hard-nosed and more cooperative spirit will keep volatility in check unless, of course, sudden other hot spots take over the game of headline ping pong.

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A Giant Bullish Illusion

Ulli Market Commentary Contact

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

And it all looked so promising for the bulls this morning. The major indexes were broadly higher right after the opening bell when, about mid-day, things started to fall apart, and we were lucky to score any gains at all—thanks to the closing bell.

Driving the market early on were comments from Trump and other officials easing fears about the trade-war scare, which were offset by reports that the FBI had raided the offices of Michael Cohen, Trump’s personal lawyer. Some documents were seized that allegedly were related to payments to Stormy Daniels.

In the end, today’ round trip of 800 points for the Dow was nothing but a headline driven battle as the tug-of-war for headline domination continues. We’ll have to wait and see if that contest produces a winner or if the markets continue to be stuck in the current broad sideways trading pattern.

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