Reversal Tuesday

Ulli Market Commentary Contact

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

In a reversal of what we have seen lately, the markets dug themselves a hole early on but managed to climb out of it during the afternoon with the Nasdaq and S&P 500 actually closing in the green. It was a quiet session with most of the world being on the sidelines due to the May Day Holiday.

It was a mixed picture with the clear winner being the Nasdaq, even though Apples’ earnings are still on deck and won’t be out till after the close. The Dow ended in the red thanks to a weak McDonald’s report card while possible trade talk repercussions pulled Boeing down by -1.22%.

Interest rates rose today with the 10-year bond yield climbing a modest 2 basis points to end at 2.97%. Showing continued and surprising strength was the US Dollar (UUP +0.66%), which has now sliced through its 200-day M/A to the upside and thereby shows bullish ambitions. Opinions still vary as to whether this move up is sustainable or not considering the drop UUP has seen over the past 15 months.

The Fed will be in the limelight during its 2-day meeting until the results regarding interest rates will be made public tomorrow at 11 am EST. They are expected to hold the course on rates and signal no change for the time being, but, you can never be sure.

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Ending The Month On A Sour Note

Ulli Market Commentary Contact

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

As has been the meme for the past few weeks, an early rally gave way mid-day to a broad sell-off despite positive earnings reports, which simply could not stem the downward momentum. Several last minute attempts to reverse the tide failed, and the major indexes dove into close scoring the lows for the session.

25 of the 30 Dow components ended up in the red, joined by all 11 S&P sectors, the downside leader of which was Healthcare with -1.6%. Even energy, which previously had shown some strength due to the uncertainty in the Middle East, had no bullish support and ended flat.

For April, the returns for the major indexes were anything but noteworthy, but at least we eked out some green numbers. The Dow added 0.3%, as did the S&P 500, while the Nasdaq scored a gain of less than 0.1%

So far, more than 50% of the S&P’s companies have shown their report cards with 79% of them beating Wall Street’s expectations. That is a solid percentage, which makes it somewhat concerning that the markets are showing nothing but a lackluster attitude and reaction to good earnings.

Of course, let’s not forget the host of distractions that have placed a blanket of worry over Wall Street. I am talking about protectionism and geopolitics along with concerns that global economic growth might be slowing down further. Higher bond yields are not supporting the bullish equity theme, although over the past few trading session, we’ve seen the 10-year yield back off from its 3% level, which is widely recognized as a hindrance to further upswings in the equity market.

While our Trend Tracking Indexes (TTIs) are still in “Buy” mode, we now have reached a level where we reside in striking distance of a new “Sell” signal. I have no idea whether that event will materialize in May, but I am prepared to act should a signal be given.

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ETFs On The Cutline – Updated Through 04/27/2018

Ulli ETFs on the Cutline Contact

Below please find the latest High Volume ETFs Cutline report, which shows how far above or below their respective long-term trend lines (39 week SMA) my currently tracked ETFs are positioned.

This report covers the HV ETF Master List from Thursday’s StatSheet and includes 366 High Volume ETFs ETFs, defined as those with an average daily volume of more than $5 million, of which currently 196 (last week 197) are hovering in bullish territory. The yellow line separates those ETFs that are positioned above their trend line (%M/A) from those that have dropped below it.

Take a look:

The HV ETF Master Cutline Report

In case you are not familiar with some of the terminology used in the reports, please read the Glossary of Terms.

If you missed the original post about the Cutline approach, you can read it here.

ETF Tracker Newsletter For April 27, 2018

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ETF Tracker StatSheet

https://theetfbully.com/2018/04/weekly-statsheet-for-the-etf-tracker-newsletter-updated-through-04-26-2018/

 LACKLUSTER SESSION KEEPS INDEXES IN CHECK

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

A rising tide is supposed to lift all boats, but that was clearly not the case today. After yesterday’s strong earnings results from Amazon, Intel and Microsoft, you would have expected a follow through bullish day for the tech sector, which never happened.

After an early uptick, the markets vacillated around the unchanged line and ended up with the Dow in the red, the Nasdaq just about unchanged and the S&&P gaining a tad. It was dampened enthusiasm at its best despite the 3 players being involved representing some of the biggest and most influential companies in the world. Go figure…

Maybe Exxon’s tepid earnings report contributed to the lack of buying along with the latest GDP data. It showed that sharply slowing personal consumption had an effect as the Q4 2017 GDP number of 2.9% looks really good right now compared to the just released first quarter annualized GDP of 2.3%, which is the lowest in the past year.

None of these numbers confirm that the economy is rip-roaring but is decelerating with only some sectors showing strength. Even an assist in the form of the 10-year bond yield (2.96%) continuing to slide further away from the 3% marker had no influence on market behavior.

I think we are still stuck in a broad sideways pattern but we will, as is virtually a guarantee, break out at some point. The open ended question is whether it will be to the upside or to the downside. Only time will tell.

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Weekly StatSheet For The ETF Tracker Newsletter – Updated Through 04/26/2018

Ulli ETF StatSheet Contact

ETF Data updated through Thursday, April 26, 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 +1.15% after having generated a new Domestic Buy signal effective 4/4/2016 as posted.

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Tech Sector Pulls Markets Out Of The Doldrums

Ulli Market Commentary Contact

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

The tech sector took the lead during today’s rally, powered by FB’s strong results, which helped their shares to a solid +9.06% gain. While technology was the biggest gainer, 9 of the 11 primary S&P sectors finished higher. The loser of the day was telecommunications with -3.2%, which suffered due to AT&Ts poor results.

Interest rate concerns were pushed to the back burner as the 10-year bond yield slipped today and moved below its widely watched 3% level restoring a bit of calmness in the markets—at least for the time being. This benefited our Trend Tracking Indexes (TTI), which increased their safety margins to their M/As, meaning that a potential “Sell” signal is not imminent based on current numbers (see section 3 below).

While the tech sector appears to have found some footing, after it became clear that FB’s debacle of the last 45 days apparently did not affect their growth and user adoption, we might see some more upside over the next couple of days. That is until Apple Computers presents its report card on May 1. If their earnings are less than expected, thereby confirming recent stories about a reduction in demand, the tech euphoria might fade quickly.

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