Dipping And Ripping

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

Early morning selling pressure, possibly related to the 30th anniversary of the 1987 crash, pushed the major indexes lower, with the S&P 500 being down a non-newsworthy -0.33%, before starting the long climb towards the unchanged line.

Other reports were mixed with earnings being robust while political tensions in Europe and questionable economic data out of China underpinned the early negativity. In the end, two of the three major indexes managed to close in the green with the Nasdaq trailing and closing in the red, in part due to Apple (AAPL) having a really bad day (-3.78%).

A spike in the VIX to 11 caused the markets to show the early weakness, but manipulating this index off the highs and pushing it sharply lower contributed to today’s rebound. Still, the recovery was not much to brag about, as most ETFs closed on a mixed note. On the upside, we saw Dividend ETFs (SCHD) leading with a gain of +0.23% with MidCaps (SCHM) occupying second place (+0.10%). Heading up the losers were Emerging Markets (SCHE) and International SmallCaps (SCHC), which retreated -0.83% and -0.63% respectively.

In the interest rate arena, the yield on the 10-year bond dropped 1 basis point to 2.33% helping the 20-year bond price (TLT) to squeeze out a +0.18% gain. Gold pushed towards its $1,300 level again, while oil slipped -1.23%. The US dollar (UUP) followed suit by gapping down and losing -0.25%.

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IBM Surges And Pushes Dow To New Record

Ulli Market Commentary Contact

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

Sometimes you just have to laugh. The Dow rallied sharply by some 160 points with over 100 of them coming from IBM’s jump in stock price of almost 9%, its best in 9 years. You’d think that IBM’s earnings report card set the world on fire, but that was not the case, as they managed to beat expectations for profit and sales despite declining revenues for a 22nd consecutive quarter. Creative accounting allowed the company to have an astonishingly low tax rate of 11%. Go figure…

The S&P 500 and Nasdaq were the laggards and barely managed to crawl above the unchanged line. Consequently, we saw some mixed results in the ETF arena. Transportations (IYT) ranked number 1 with a +0.79% gain followed by SmallCaps (SCHA) with +0.38% and Semiconductors with +0.37%. Surprisingly, we saw no red numbers, although LargeCaps (SCHX) lagged the bunch by adding only +0.11%.

Interest rates rose with the 10-year yield adding 4 basis points to end the session at 2.34%. Gold remained weak, but oil eked out a small gain to conquer the $52 level. The US dollar (UUP) got pumped and dumped intra-day and ended the session lower by -0.12%.

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Struggling To Defend Records

Ulli Market Commentary Contact

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

While the Dow managed to eclipse the 23k milestone marker intra-day, it was not able to hold this level into the close by falling 3 points short. Nevertheless, the record is in the books with the Dow notching its 4th 1,000 point climb in the past 12 months—the most ever in a calendar year.

Unbridled optimism about Trump’s tax plan remains the main focus, despite absolutely no assurances that it will have the support to be implemented and actually executed. But those appear to be minor details also brushed aside by an alleged improving economic outlook along with positive corporate earnings.

Be that as it may, the major trend continues to be up, and we will stay on board until that fact changes. Despite the Dow’s glitter, the actual performance of the major indexes was mixed at best. In ETF space, the gains were sparse with only the Dividend ETF (SCHD) and LargeCaps (SCHX) adding +0.4% and 0.3% respectively. On the downside, Emerging Markets (SCHE) took the lead with -0.47% followed by Transportations (IYT) with -0.37%.

Gold took a dive and surrendered not just -1.22% but also gave back its $1,300 marker. Interest rates were mixed but the 20-year bond (TLT) managed to eke out a +0.13% gain. The US dollar (UUP) round tripped by rallying sharply at first and then giving back most of its gains, but it still managed to end the session up +0.25%.

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Crawling Deeper Into Record Territory

Ulli Market Commentary Contact

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

And the theme continued with the major indexes slowly but surely scoring another round of records, as the Dow closed within spitting distance of a new milestone marker, namely the 23,000 level. All of this came in anticipation that the upcoming earnings season won’t disappoint but to also confirm that the current lofty market levels are justified.

Comments from President Trump on tax cuts and healthcare issues after a meeting with Senate Majority leader McConnell did not affect markets, although the issues discussed are very critical for the continuation of bullish momentum.

Equity ETFs were a mixed bag today with a number of them ending unchanged. On the winning side of the column, we saw Semiconductors (SMH) with +0.54% and LargeCaps (SCHX) with +0.15%. Closing in the red were Transportations (IYT) and International SmallCaps (SCHC) with -0.78% and -0.30% respectively.

Interest rates rose today with the 10-year bond yield adding 2 basis points to 2.30%. Gold slumped and gave back its recently conquered $1,300 level, while crude oil gained +0.80%. The US dollar (UUP) jumped +0.25% in an effort to remain above its 50-day Moving Average, a level that was broken intra-day last Friday. The major trend remains bearish.

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One Man’s Opinion: The US Government Lost Nearly $1 Trillion In FY2017. Again.

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By Simon Black

There was a time, centuries ago, that France was the dominant superpower in the world.

They had it all. Overseas colonies. An enormous military. Social welfare programs like public hospitals and beautiful monuments.

Most of it was financed by debt.

France, like most superpowers before (and after), felt entitled to overspend as much as they wanted.

And their debts started to grow. And grow.

By the eve of the French revolution in 1788, the national debt of France was so large that the government had to spend 50% of tax revenue just to pay interest to its lenders.

Yet despite being in such dire financial straits the French government was still unable to cut spending.

All of France’s generous social welfare programs, plus its expansive military, were all considered untouchable.

So the spending continued. In 1788, in fact, the French government overspent its tax revenue by 20%, increasing the debt even more.

Unsurprisingly revolution came the very next year.
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ETFs On The Cutline – Updated Through 10/13/2017

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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 283 (last week 286) 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.