Tech Sector Pulls Down Stocks

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

The 3-day really came to an end today with the major indexes pulling back but rallying off their session lows to limit damage. The late day rebound was the result of an announcement that Trump was told by Rosenstein that he was not the target of the Mueller investigation. That lifted the bullish spirits and sent stocks higher.

The technology sector stumbled with especially Semiconductors taking a hard hit with SMH dropping -4.46%, which brings it to within shouting distance of triggering its trailing sell stop. We’ve seen this scenario now several times over the past couple of months and each time SMH managed to recover. We’ll find out soon if this time will be different.

Earnings in general disappointed in other areas as well. Tobacco stocks got spanked, thanks to Philip Morris, and lost over 12%. Apple dropped almost 3%, not due to any announcements, but it was simply the casualty of a weak tech sector.

Financials (XLF +1.53%) outperformed most likely due to higher interest rates. The 10-year bond yield continued its recent snap-back and gained 5 basis points to end the session at 2.92%, a level last seen in mid-March. That caused the US Dollar to jump +0.30% back above its 50-day M/A.

Today’s reversal, after the smooth ride higher over the past 3 days, serves as a reminder that market conditions can change quickly, and that it is imperative not to become complacent but to remain alert and be prepared to deal with any directional changes that might come our way.

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Hanging On To The Unchanged Line

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]
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The Dow was the weakling of the day as IBM got spanked at the tune of -7.53%, which equaled a loss of 84 points on the Dow. We had a positive opening, followed by a dump and pump and a soft slide into the close with 2 out the three major indexes managing to end in the green by a tiny margin.

Energy (XLE) made up for some of the weak sectors by gaining +1.56% joined by Transportations (IYT +1.77%), whose performance is widely recognized as a bullish indicator. So far, banks are suffering despite good results with the Banking index (KRX) losing another -0.58% and honing in on early April lows. Financials (XLF) joined the club and gave back -0.44% despite solid earnings.

IBM was the center of attention with its sharp drop in stock price, which was its worst one-day decline since April 2013. Its earnings beat was the result of fancy accounting driven by a one-time tax gain.

In other news, the Fed’s Beige Book release did not affect markets, as its economic activity was shown to remain at a modest to moderate pace. Interest rates reversed and jumped with the 10-year bond yield gaining 5 basis points to end at 2.87%. So did the US Dollar (UUP) which, despite a volatile session, rose +0.21%.

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Markets Pop On Earnings Cheers

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]
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After yesterday’s solid gains, equities followed through with another session marked by bullish sentiment, as the major indexes piled on gains for the second straight day. The S&P 500 conquered its 50-day M/A to the upside and closed at a level last seen on March 19. The rally was broad with all 11 S&P sectors ending higher.

One supporting actor was the VIX, which dropped below 15, its lowest level since March 9. The VIX is a reflection of bullish and bearish option contracts. It moves opposite to stocks, meaning when it rallies, it creates a bearish environment for equities and vice versa.

Helping the markets was a positive view of first-quarter-earnings with growth expected to be some 17.3%, a number which we have not seen since 2011, although it’s uncertain how much of this is attributable to Trump’s recently passed tax bill. Everything was interpreted as a positive that even the underperformance of bank stocks, despite “blockbuster” Goldman Sachs earnings, could not put a dent in the session’s bullish trend.

Interest rates were lower with the 10-year bond yield giving back another basis point to close at 2.82%. The US Dollar (UUP) had a roller coaster day but ended unchanged.

In the end, assisting the markets as well was the fact that trade tensions with China did not worsen recently, which encouraged investors to maintain and add to equity exposure.

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Markets Gain Broadly As Geopolitical Tensions Wane

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]
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By the time the opening bell rang this morning, the lobbing of a bunch of missiles into useless Syrian targets on Friday had been long forgotten with the focus now having shifted to the upcoming earnings season.

Everything appeared to be positive for the market with the S&P 500 honing in on its 50-day M/A, below which it has been stuck since March 9th. All of the 11 S&P sectors closed in the green. While BofAs earnings results exceeded expectations, the stock rose only +0.44%.

Interest rates showed a mixed picture with the 10-year bond yield coming down by 1 basis point to end the day at 2.83%. The US Dollar (UUP) gave back -0.34% and dipped below its 50-day M/A confirming bearish momentum.

With the Syrian debacle having died down, hopefully for good, and earnings season on deck, with great expectations, we should be able to break out of the current congestive sideways pattern and resume a more consistent upward trend. Only time will tell.

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ETFs On The Cutline – Updated Through 04/13/2018

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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 193 (last week 125) 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 13, 2018

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ETF Tracker StatSheet

https://theetfbully.com/2018/04/weekly-statsheet-for-the-etf-tracker-newsletter-updated-through-04-12-2018/

 ENDING THE WEEK WITH A WHIMPER

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

The major indexes came under pressure and surrendered early gains as initial reads on the upcoming earnings season disappointed. Expectations have been high about corporate performance maybe in part due to the fact that geopolitical anxieties have painted a distorted picture.

While three major banks showed some better than anticipated report cards today, equities headed south anyway and pushed the financial sector down (XLF -1.51%). Still for the week, the Dow gained 2% while the S&P 500 and Nasdaq added 2.1% and 3% respectively.

Headline news ping-pong was in full swing today including such topics as China trade wars, Comey, Rosenstein, Mueller, Syria, Russia and slumping consumer sentiment, which were all adding to the general confusion in the market place rather than providing much needed clarity.

But, these are the roller-coaster times we live in, so we will continue to focus on the only reality we have, which is the major direction of the markets via our Trend Tracking Indexes (TTIs). The trend remains bullish, and we will stay on board until the bears gain the upper hand.

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