ETF Tracker Newsletter For December 15, 2017

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ETF Tracker StatSheet

https://theetfbully.com/2017/12/weekly-statsheet-etf-tracker-newsletter-updated-12142017/

 EXTENDING THE WEEKLY GAIN STREAK

 

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

When looking at yesterday’s weakening market action, today can only be described as “opposite” day, as senators Rubio and Corker fell in line and announced a “Yes” vote to the long overdue agreement on Trump’s tax plan, as a last minute expansion of the child tax credit proved to be the solution. While this vote may not be chiseled in stone, it created enough optimism to torpedo the major indexes into record territory—again.

Equities scored some nice gains, and in ETF land we saw mostly green numbers. The only exception was International Equities (SCHF), which slipped -0.09%. On the plus side, we spotted several ETFs with gains above 1%. The number one spot was taken by our standby favorite, namely Semiconductors (SMH) with +1.64%. In close pursuit were Aerospace & Defense (ITA +1.62%), US SmallCaps (SCHA +1.24%) and MidCaps (SCHM +0.84%).

While the 10-year bond remained unchanged, the action was in the longer dated securities with the 20-year rallying +0.38% and honing in on its 2017 high as the yield curve continues to flatten (meaning that long term yields are falling while near term yields are rising). The US dollar (UUP) bounced back from its recent sell off and gained +0.41%.

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Weekly StatSheet For The ETF Tracker Newsletter – Updated Through 12/14/2017

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ETF Data updated through Thursday, December 14, 2017

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 +3.39% after having generated a new Domestic Buy signal effective 4/4/2016 as posted.

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When A Done Deal Is Apparently Not A Done Deal

Ulli Market Commentary Contact

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

Market exuberance reigned early on and had the major indexes on track to set more record highs when jawboning by senators Rubio and Lee caused a case of severe tax-reform-anxiety. While we all thought the tax reform was a done deal, it does not appear so as questions regarding the “child tax credit” caused Lee to announce that he’s undecided and Rubio declaring a “No” vote unless changes are made.

That’s all it took, and the markets went into reversal mode and headed for the basement with prices ending at the day’s lows. In the bigger scheme of things the losses were small but losses nonetheless. In ETF space, we only saw red numbers. Giving back the most were US SmallCaps (SCHA) with -1.01% followed by Transportations (IYT) and Financials (XLF) with -0.71% and -0.65% respectively. Holding up the best were Semiconductors (SMH) with -0.04%.

Interest rates were mixed but the 20-year bond (TLT) outperformed by gaining +0.48%, while the High Yield sector (HYG) went the other way, traded in a wide range but only -0.21%. Gold continued its recovery and Crude Oil was solid with a +0.95% gain. The US Dollar (UUP) round tripped and faded into the close but managed to rebound +0.08%.

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Fed Hikes Rates; Dow Ends At Fourth Straight Record High

Ulli Market Commentary Contact

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

Early market exuberance faded late in the session with only the Dow and Nasdaq clinging on to modest gains, while the S&P 500 slipped slightly into the red. The Fed raised the benchmark Fed funds rate by 0.25%, as expected, which was the fourth hike in the past year. The much awaited 2018 forecast in regards to inflation and interest rates was a nothing burger, as they stuck to previously announced plans to hike rates three times.

As a result, equities pulled back and our ETF space ended up with mostly green numbers. Taking leadership was Emerging Markets (SCHE) with a solid +1.02% with International SmallCaps (SCHC) occupying second place with +0.58%. On the downside, we saw a reversal in that Financials (XLF -1.24%) gave back yesterday’s gains; also ending in the red was MidCaps (SCHM) with -0.21%.

Interest rates took a dive with the yield on the 10-year bond losing 4 basis points to 2.36%. That allowed the 20-year bond (TLT) to rally +0.75% and reversing a two-day downtrend. Gold glittered today by adding a solid +1.32%, but it ended the session just short of reclaiming its 50-day M/A. The US Dollar (UUP), on the other hand, took a dive by losing -0.69%, which was its first down day in 7 sessions. It also meant that it broke back below its 50-day M/A.

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More Records

Ulli Market Commentary Contact

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

In a repeat from yesterday, the Dow and S&P 500 climbed into record territory for the fourth session a row, while the Nasdaq bucked the trend and slipped a tad. While tomorrow’s announcement by the Fed about a 0.25% rate hike is a foregone conclusion, some anxiousness prevails about what signals may be given about 2018 and how the Fed views the economic conditions.

While MSM did not cover much in regards to the eruption of US Producer prices, at the fastest pace in six years, it nevertheless was a big headline with a year over year surge of 3.01%. Energy played a big role with final demand climbing 4.6%.

In ETF space, the numbers were mixed but fairly balanced. Gaining strongly were Financials (XLF) with +1.00% followed by Aerospace & Defense (ITA) with +0.36%. With the Nasdaq slipping, it was no surprise that Semiconductors (SMH) fell as well and lost -0.98% with Emerging Markets (SCHE) giving back -0.58%.

The yield on the 10-year bond rose 1 basis point, Crude Oil took a hit and gold desperately tried to climb above the $1,350 level but failed. The US Dollar (UUP) continued its recent rebound for the seventh straight day and is now solidly entrenched above its 50-day M/A.

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Dow And S&P 500 March Into Record Territory

Ulli Market Commentary Contact

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

All 3 major indexes started the week in rally mode and finished solidly in the green, but only the Dow and S&P 500 set new record highs despite the Nasdaq scoring the best. The NY city terrorist incident disrupted the bullish mood only briefly, and the rally resumed. The main focus for traders was the Fed’s two-day meeting on interest rates with the results to be released on Wednesday. Expectations are just about 100% that they will deliver their third and last rate hike (1/4%) for 2017.

The ETF space I follow saw more green than red numbers. On the plus side, Emerging Markets (SCHE) ruled with a gain of +0.66%, which was closely followed by Semiconductors (SMH) with +0.61% and LargeCaps (SCHX) with +0.30%. Aerospace & Defense (ITA) gave back -0.67% along with Transportations (IYT), which surrendered -0.25%.

Interest rates headed north with the 10-year bond yield climbing 1 basis point. Gold slipped and Crude Oil gained +1.15%. The US dollar (UUP) round tripped and managed to cut its mid-day losses to end the session unchanged.

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