ETF Tracker Newsletter For March 9, 2018

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ETF Tracker StatSheet

https://theetfbully.com/2018/03/weekly-statsheet-etf-tracker-newsletter-updated-03-08-2018/

 A ONE WAY STREET FOR THE BULLS

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

Forget the concerns of the past week. Things like tariffs, trade wars, rising bond yields and Gary Cohn’s exit from the White House appear to be in the rear view mirror, as the non-farm payroll report took front and center, which ZH summarized as follows:

While the headline payroll print of 313K was impressive, a look under the cover reveals even stronger data: first, the Household Survey showed that a whopping 785K jobs were added in February, while the number of unemployed Americans rose by only 22K, and with the labor force rising by 806K, this explains why the unemployment rate remained unchanged at 4.1%.

But what is even more notable is that when looking at the breakdown of job additions, one finds that in February, a near record 729K full-time jobs were added, the biggest monthly increase since last September’s 794K…

The bulls licked their chops and upward momentum went into overdrive despite the fly in the ointment being a total lack of wage growth, but hey, who cares about such trivia as the major indexes rallied without a pause with the Dow reclaiming its 25k level. The Wall Street mood was upbeat and remained that way despite the 10-year bond yield adding 4 basis points to end the week at 2.90%.

Notwithstanding the ups and downs all week, the US Dollar managed to close unchanged over the past 5 trading sessions. Looking towards next week, I am curious to see if this rally has legs and can lead us towards taking out the old highs.

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Weekly StatSheet For The ETF Tracker Newsletter – Updated Through 03/08/2018

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ETF Data updated through Thursday, March 8, 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 +3.46% after having generated a new Domestic Buy signal effective 4/4/2016 as posted.

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Equities Drop and Pop

Ulli Market Commentary Contact

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

While we opened the session on a positive note, equities started slipping and sliding being spooked by early rumors as to who would get Gary Cohn’s job. However, that talk fell by the wayside when news headlines announced not only unlimited exemptions for Canada and Mexico from Trump’s tariffs but also allowed other countries (to be named later) to negotiate exclusions.

That shifted the early downtrend in reverse, and the major indexes crawled out of the basement and back above their respective trend lines to close modestly in the green. Leading our selected ETFs were LargeCaps (SCHX +0.43%) followed by International SmallCaps (SCHC +0.41%) and International Equities (SCHF +0.24%).

Interest rates slipped but came off their lows with the 10-year yield dropping 3 basis points to close at 2.86%. The US Dollar (UUP) rallied nicely, then fell back but still managed to gain +0.64%. Today looked to be one of consolidation and examination as to how the dreaded trade tariff threats may play out. If they indeed turn out to be “softer” than originally announced, meaning that just about any country can individually negotiate their own deal, we might see the rebound in equities become not just less volatile but also pick up some steam.

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Overnight Futures Carnage; Markets Recover And Wipe Out Losses

Ulli Market Commentary Contact

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

The futures markets looked downright ugly last night with Dow being down over 400 points, as the fallout from Wall Street-friendly Gary Cohn’s resignation made headlines around the world. The weakness spread into today’s session early on, but by mid-day a slow and steady crawl back materialized with the Nasdaq gaining, the Dow losing slightly while the S&P 500 got stuck just below its unchanged line.

The adverse market reaction was in regards to the upcoming tariffs on steel and aluminum imports, which Cohn had vehemently opposed and, with his resignation, fears of a trade war intensified. Neutralizing those negatives was the release of the Fed’s beige book, which surprisingly highlighted modest economic growth along with moderate inflation. That was music in the ears of the bulls and the rebound began.

With the markets bouncing as rapidly as they did today, the recovery only had a limited effect on our selected ETFs. The gainers were Semiconductors (SMH +0.43%), Aerospace & Defense (ITA +0.30%), MidCaps (SCHM +0.20%) and Emerging Markets (SCHE +0.14%).

Interest rates swung wildly but settled down at the end with the 10-year bond yield adding 1 basis point to close at 2.89. The US Dollar showed some gains early on, but slipped to give back a tiny -0.09%. I expect more volatility as the “tough trade talk” continues, yet any talk of compromise is sure to set the markets on fire.

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Markets Resemble A Bucking Bronco

Ulli Market Commentary Contact

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

The S&P 500 chart clearly demonstrates the kind of trading session we saw today with wild swings in the averages, below and above their respective trend lines, resembling a bucking bronco. In the end, the bulls notched a victory and scored modest gains.

There were only two news items which created this wild market behavior. First, there were positive developments between North and South Korea agreeing to hold their first summit in April, after more than 10 years of silence. Second, the tariff hype game found some opposition in the Republican Party, but Trump appeared to show some willingness to be flexible on trade tariffs with Canada and Mexico. But, any clarity is still missing making me believe that markets will continue with their erratic reactions to the latest headline ping pong.

Nevertheless, the bulls prevailed, and our selected ETFs ended up in the green. With the Nasdaq outperforming on the day, it’s no surprise that Semiconductors (SMH) lead the pack with +1.47%. International SmallCaps (SCHC +0.99%) and International Equities (SCHF +0.77%) took second and third place respectively. Aerospace & Defense (ITA) lagged with -0.17%.

Despite the volatility in equities, interest rates were tame with the 10-year bond yield remaining unchanged at 2.88%. The US Dollar (UUP) headed back south by -0.26% giving back some of its recently earned gains.

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Snapping The Losing Streak

Ulli Market Commentary Contact

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

After last week’s drubbing, and an early morning pullback, the major indexes managed a broad-based bounce back with Wall Street traders looking past the trade war rhetoric by focusing on economic data and hope that the sell-off was overdone. Even political uncertainty in Italian elections, where a populist anti-euro party made a better-than-expected showing, couldn’t stop the bulls from flexing their muscles.

Supporting the rally was bargain hunting and short covering with news out of Washington clearly controlling market direction. Sure, we may see more growth and robust earnings, but at the same time we may also have to confront ongoing volatility, caused by hawkish comments and higher rates, which could bring in the downside at anytime.

However, for today it was bullishness across the board with our selected ETFs faring well. Financials (XLF) were the dominator by adding a solid +1.41%. That was followed by the Dividend ETF (DVY +1.22%), MidCaps (SCHM +1.21%) and LargeCaps (SCHX +1.12%).

Interest rates bounced intra-day with the 10-year bond yield adding 2 basis points to close the session at 2.88%. The US Dollar (UUP) vacillated but ended unchanged remaining a tad below its 50-day M/A.

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