ETF Tracker Newsletter For November 3, 2017

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ETF Tracker StatSheet

https://theetfbully.com/2017/11/weekly-statsheet-etf-tracker-newsletter-updated-11022017/

DOW AND S&P 500 SCORE 8TH STRAIGHT WEEKLY GAIN

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

And the beat goes on. After a weak opening, the major indexes found some footing and continued their ascent into record territory. The rise was modest with an assist coming from Apple (AAPL) due to their strong report card, which was good enough to offset mixed economic data points including a mediocre October jobs report. Payrolls grew by 261k last month vs. expectations of 325k. The unemployment rate slipped from 4.2% to 4.1% despite news that 968k exited the labor force pushing the total number of people not in the labor force to 95.385 million—and that was supposed to have led to a lower employment rate? Go figure…

Giving the markets a big assist was the crushing of the VIX to 8.99 intra-day and to a record weekly closing low of 9.03. That helped the mid-day rebound, as we have become accustomed to throughout this year.

As a result, most of our ETF holdings gained, but there were some losers as well. Leading to the upside were Semiconductors (SMH) with +1.10% followed by LargeCaps (SCHX) with +0.31%. On the downside, we saw Aerospace & Defense (ITA) pulling back -0.67% after its huge gain yesterday, while the Emerging Markets (SCHE) surrendered -0.51%.

Interest rates dropped with the 10-year bond giving back 1 basis point to end the week at 2.34%. Crude oil gained and has now crawled back above its $55 level. After whip-sawing all week, the US Dollar (UUP) rebounded to end the past 5 trading days just about unchanged.

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Weekly StatSheet For The ETF Tracker Newsletter – Updated Through 11/02/2017

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ETF Data updated through Thursday, November 2, 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 +3.22% after having generated a new Domestic Buy signal effective 4/4/2016 as posted.

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Dow Sets A New Record

Ulli Market Commentary Contact

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

While the Dow managed to eke out a new record high, the S&P 500 and Nasdaq struggled all day to get back to even with the latter just coming up short. We traded lower for most of the session as a result up Trump’s unveiling of the much-hyped tax plan. Some of the most sweeping overhauls in decades were expected, but traders were less than impressed, which assisted the markets to recoup their early losses.

Actually, many interpreted the bill as having “little chance of passing,” which helped alleviate fears of a negative effect on equities, and the slow climb towards the unchanged line resumed. Hoping for status quo was the meme of the day, and bonds benefited as yields dropped allowing the 20-year bond (TLT) to rally and gain +0.44%.

Our ETF holdings fared very well with far more winners than losers. Taking top billing was Aerospace & Defense (ITA) with a chest pounding rebound of +1.76%. Financials (XLF) placed 2nd with a nice showing of +0.94% and even Semiconductors (SMH) produced +0.47% in the face of a weak Nasdaq. On the downside, the losses were tiny with International SmallCaps (SCHC) and Transportations (IYT) surrendering -0.16% and -0.05% respectively.

The US Dollar (UUP) was whipsawed all day in a fairly broad range but ended the session unchanged. ZH summed it up best: “The bottom line from the reaction by markets seems to be traders are not expecting this bill to pass at all… and bonds are signaling the recent reflation exuberance is now fading fast.”

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Honing In On New Record Highs

Ulli Market Commentary Contact

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

While the major indexes started the first November session with a bang, upward momentum waned, and the Nasdaq ended up slipping slightly into the red, while the Dow and S&P 500 remained green. The Fed kept interest rates unchanged but jawboned some positives about the economy using descriptive words like “activity has been picking up at a solid rate.” That’s an improvement in language over September when “moderate” was the term used to describe current goings-on.

On deck is Trump’s upcoming announcement on who will become the next Fed chair. At this time it looks to be Jerome Powell, whose dovish attitude towards interest rates is well known, which could be a positive for equities. The Earnings season has been viewed as strong so far with 75% of S&P companies having beaten analysts’ estimates.

The ETF space was mixed with winners and losers pretty much balanced. Heading higher were International SmallCaps (SCHC) with +0.50% and the Dividend ETF (SCHD) with +0.37%. On the losing side, we saw US SmallCaps (SCHA) take the lead by retreating -0.51%, closely followed by Semiconductors (SMH) with -0.27%.

Interest rates were mixed as well with the 10-year bond dropping 1 basis point to 2.37%. Yields have now been bouncing in a wide trading range since mid-April within a low of 2.05% and a high of 2.46%. Sooner or later a breakout will occur and determine the true direction of the major trend. The US dollar (UUP) was subdued as well but closed up +0.20%.

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Major Indexes Conquer October; Sporting Biggest Increase Since February

Ulli Market Commentary Contact

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

The month of October has been known as the bull market killer in the past. Not so this year, as the major indexes not only survived but prospered at the tune of +4.2%, +2.2% and +3.2% respectively for the Dow, S&P 500 and Nasdaq. The Dow actually rose at twice the pace it showed in September, while the Nasdaq remains the winner for the past 12 months. Helping matters was the VIX, which was pushed towards the 9 handle in early trading setting the bullish mood for the session.

In ETF space, we saw predominantly advances. Semiconductors (SMH) took the lead with a strong +0.96% compared to the S&P’s (SCHX) meager +0.08% advance. SmallCaps (SCHA) showed signs of life again by gaining +0.71%. Heading slightly south were Transportations (IYT) and Financials (XLF) with losses of -0.44% and -0.26% respectively.

Interest rates were mixed, but the yield on the 10-year bond managed to add 1 basis point to close at 2.38%—off its recent high of 2.46%. Consequently, the US Dollar (UUP) traded in a tight range and gained a tiny +0.08%. Gold slipped but Crude oil gained and remained above its $54 level.

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Indecision Reigns

Ulli Market Commentary Contact

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

Equities struggled with only the Nasdaq managing to spend some time above the unchanged line early on, and knocking out another intra-day record, but it too succumbed to weakness, before sliding slightly into the red.

Trump’s tax cuts were at the center of the market weakness, as the House was discussing a more “gradual phase-in for the corporate tax-rate cut,” against the President’s plan for an immediate reduction. Any danger of sudden changes being implemented is bound to affect markets, as the tax-cut has formed the base for recent market advances.

As uncertainty reigned, the ETF space was affected as well, and we saw more red numbers than green ones. Closing the session on a positive note were International SmallCaps (SCHC) and International Equities (SCHF) with gains of +0.70% and +0.24% respectively. On the downside, Transportations (IYT) took the biggest hit with -1.31% followed by US SmallCaps with -0.85%.

Interest rates headed south as the yield on the 10-year bond took a dive by losing 5 basis points to end at 2.37%, which helped the 20-year bond price (TLT) to finally show signs of life again by rallying +0.96%. The US dollar (UUP) headed the other way and lost -0.49%.

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