ETF Tracker Newsletter For October 6, 2017

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ETF Tracker StatSheet

https://theetfbully.com/2017/10/weekly-statsheet-etf-tracker-newsletter-updated-10052017/

FINALLY BREAKING THE STREAK OF RECORDS

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

It had to happen eventually. Any string of records will come to an end, and the major market indexes are no exception. It was a mixed bag though with Transportations experiencing its first down week in seven while the Dow notched its fourth up-week in a row. The S&P 500’s record streak came to an end, as the index slipped a tiny -0.11% but it was up solidly for the past 5 trading days.

Causing weakness in equities was the jobs report, which showed a contraction of 30,000 in nonfarm payrolls for September. Some of this was priced in due to the severe disruptions caused by Hurricanes Harvey and Irma. However, what was conveniently overlooked my MSM were the revisions. Look at this: July payroll employment was revised down from +189k to +138k, while August was revised up from +156k to +169k. Combined, it means that employment gains were 38k less than reported…

Of course, we know that markets and economic data are for the most part fabricated. Today, the BLS was caught manipulating wage data, which was nowhere reported either. If this subject interests you, please read the details here.

At the end of the day, equity ETFs suffered only small losses with Emerging Markets (SCHE) leading the pack lower with -0.40% followed by SmallCaps (SCHA) with -0.18%. Bucking the weakness were Semiconductors (SMH) with a gain of +0.40%.

Interest rates traded in a wide range and closed higher causing the 20-bond ETF (TLT) to lose -0.28%. Gold edged up, but Crude oil dropped another -2.91% not only below its $50 marker but also below its 200-day M/A. The whipping boy of the year, the US Dollar (UUP), also traded erratically but ended the day only -0.16% lower.

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Weekly StatSheet For The ETF Tracker Newsletter – Updated Through 10/05/2017

Ulli ETF StatSheet Contact

ETF Data updated through Thursday, October 5, 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 +3.27% after having generated a new Domestic Buy signal effective 4/4/2016 as posted.

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Up, Up And Away…S&P 500 Logs Its Sixth Straight Record Close

Ulli Market Commentary Contact

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

A passed budget bill proved to have enough fire power to propel the major indexes into record territory—again. The passed budget resolution is seen as a stepping stone to finally overhaul the tax code. While the timing of this event is still unknown, recent pessimism has now been replaced with hope that a resolution could be possible.

Consumer confidence took a hit, but that did not matter as equities were stuck in a one way street with green being the preferred color of the day. Not only did the S&P log its 6th record close, it also logged its 8th up-day in a row, which is its longest win streak since 2012. Throwing an assist to make this possible was the VIX, which was crushed again to an intra-day low of 9.13.

In ETF land, we saw predominantly gains but also some losses. Aerospace & Defense (ITA) took the lead with a gain of +0.61%, which was followed by US LargeCaps (SCHX) with +0.58% and the Dividend ETF (SCHD) with +0.42%. On the downside, International SmallCaps gave back -0.28% while the Transportations (IYT) surrendered -0.20%.

Interest rates rose with the yield on the 10-year bond climbing 2 basis points to 2.35%. Gold gave back -0.46%, Crude oil reclaimed its $50 marker; the US dollar jumped and gained +0.54%.

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Maintaining Upward Momentum

Ulli Market Commentary Contact

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

Even though today’s gains were modest, they were gains nonetheless. The major indexes continued their ascent into record territory despite a slow start right after the opening. However, in the end, the S&P 500 posted its sixth consecutive day of gains.

Private sector employment slowed from September with 150k jobs added. All eyes are now on Friday’s nonfarm payroll report, the outcome of which could drive markets higher. On the other hand, no matter what the number, the markets may rally anyway; it’s just the “new normal” type of environment we’re in.

The shocker of the day and the moment of truth came from SmallCaps, which actually ended the day lower with the Russell 2000 diving an incredible -0.25%, its worst drop in over a month… of course, I am being facetious…

In ETF land, the picture was mixed but the outcome of the session was overall positive. The Aerospace and Defense ETF (ITA) came in first place with a gain of +0.31%. Second place was a tie with Semiconductors (SMH) and Emerging Markets (SCHE) each adding +0.15%. Closing in the red was the Transportation Index (IYT) with -0.49% and US SmallCaps (SCHA) with -0.22%.

Interest rates changed immaterially, gold edged higher, oil slipped back below $50, and the US dollar (UUP) pulled back a tiny -0.12%.

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Gaining Steam Late In The Session

Ulli Market Commentary Contact

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

After some early aimless meandering, although above the unchanged line, the major indexes picked up some steam late in the day to book another round of records. The Dow, the Nasdaq, the S&P 500 and the Russell all registered all-time highs.

You can find a lot of reasons for and against a continuation of this rally, but the fact remains that right now the bulls are clearly in charge. Some recent manufacturing data have supported the positive view on stocks along with continued hopes for Trump’s tax cut ideas.

Still, some think that the advance YTD has been overdone. No question about it, but no one has the answer as to when the inevitable turnaround will happen; we’ll simply follow the major trend until it ends and our exit strategy tells us to step aside.

In the ETF arena, we saw nothing but green numbers, at least in those funds we currently own. Emerging markets (SCHE) took the lead with a solid +1.45% gain, followed by Transportations (IYT) with +0.70%. Lagging the bunch were SmallCaps (SCHA) with +0.22% and Aerospace & Defense (ITA) with +0.01%.

Interest rates dropped a tad allowing the 20-year bond (TLT) to bounce off its recently made bottom by gaining +0.10%. Gold was pretty much unchanged and appears to be glued to its 100-day M/A. The US dollar index (UUP) traded within a tight range and ended up dropping an insignificant -0.04%.

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Equities Rocket Higher In Face Of Mass Shooting

Ulli Market Commentary Contact

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

Right now, it seems that nothing can stop the northerly path of equities. Despite the police brutality associated with the Catalonian secession vote in Spain over the weekend and last night’s mass shooting in Las Vegas, the major indexes started the day in positive territory and resumed a steady run-up throughout the session. New records were set for the Dow, Nasdaq, S&P 500 and Russell 2000.

It appears the main driving force is nothing but unbridled optimism about the fourth quarter along with high earnings expectations for the just passed third quarter. Despite doubts as to whether Trump’s tax plan can still be voted on and/or passed this year, in its current form, the fact that this plan even exists seems enough to wet a trader’s bullish appetite.

In regards to ETFs, we saw SmallCaps (SCHA) taking the lead with a solid gain of +1.11% followed by MidCaps (SCHM) with +0.64%. Not crossing the unchanged line to the upside were Transportations (IYT) and Emerging Markets (SCHE) with tiny losses of -0.15% and -0.07% respectively. Interest rates rose with the yield on the 10-year Treasury bond climbing 2 basis points to 2.33%. That caused the US Dollar (UUP) to gap higher +0.58%; a level that is now clearly above its 50-day M/A and indicates a short-term uptrend.

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