ETF Tracker Newsletter For October 13, 2017

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ETF Tracker StatSheet

https://theetfbully.com/2017/10/weekly-statsheet-etf-tracker-newsletter-updated-10122017/

ENDING THE DAY AND THE WEEK WITH A GAIN

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

The trading range for the major indexes turned out to be a narrow one not just for the day but for the week as well. Nevertheless, we closed slightly up with the Nasdaq logging its 57th all-time high. While weekly gains were modest, they stretched across all asset classes including stocks, bonds (Treasuries and Corporate), gold and crude oil.

In ETF space, we saw more winners than losers. Leading the charge to the upside today were Emerging Markets (SCHE) with +0.94% followed by Semiconductors (SMH) with +0.68% and International SmallCaps (SCHC) with +0.55%. On the downside, Transportations (IYT) gave back -1.04% of their recent gains as did Aerospace & Defense (ITA), which slid -0.45%.

Interest rates continued their slide with the 10-year yield slipping 5 basis points to end the day at 2.28%. That helped the 20-year bond (TLT) price to jump +0.72%. After several attempts, gold finally succeeded in conquering its $1,300 milestone again by gaining +0.74%. The US dollar traded in a tight range and remained unchanged for the session but fell for the week.

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Weekly StatSheet For The ETF Tracker Newsletter – Updated Through 10/12/2017

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ETF Data updated through Thursday, October 12, 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 +3.17% after having generated a new Domestic Buy signal effective 4/4/2016 as posted.

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Bouncing In A Narrow Range

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

The major indexes, as well as equities in general, struggled through the session looking for some footing to use as a launching pad for the usual mid-day rebound. It worked for a while, as the unchanged line was conquered but upward momentum faded, and we closed in the red, although only fractionally. Earnings season got underway with the first batch of the banking sector reporting. Things were mixed so far, and the Financial sector ETF (XLF) dipped -0.76%.

The Transportation ETF (IYT) moved solidly higher with a gain of +0.67%. Second place went to the Dividend ETF (SCHD) with +0.13% followed by MidCaps (SCHM) with a meager +0.08%. The downside came into play today, but the losses were tiny. Semiconductors (SMH) gave back -0.21% while LargeCaps (SCHX) surrendered -0.15%. All in all, it appeared to be a market in waiting looking for a reason to bounce higher.

Treasury yields retreated again with the 10-year giving back 2 basis points. This helped the 20-year bond (TLT), which rallied +0.43%, to make up for some recent weakness. Gold attempted again to recapture its $1,300 level but fell short. Not falling short was the US Dollar (UUP), which bounced off its recent low in a successful attempt to stay above its 50-day M/A.

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More All-Time Highs

Ulli Market Commentary Contact

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

Despite the Fed’s minutes from its September meeting, including words of caution among policy makers in regards to the next interest rate hike, market odds spiked that the widely expected December hike would materialize. Further notes indicated that it might take longer than anticipated to get inflation back to the Fed’s 2% target, and so on…

While the three major indexes were stuck at the unchanged line leading up to the release of the FOMC minutes, in the end, it was up, up and away as we levitated into record territory—again. It’s all based on hope, as odds of Trump’s tax reform are decreasing with the “Corker feud” continuing in full swing.

ETFs had a good day with most of our holdings closing in the green. Heading the pack to the upside were Semicondcuctors (SMH) with +0.71% while International Equities (SCHF) and Transportations (IYT) showed solid gains with +0.44% and +0.41% respectively. Sporting red numbers on the session were Aerospace & Defense (ITA) and US SmallCaps (SCHA) with modest losses of -0.26% and -0.03%.

Treasury yields fell again with the 10-year giving back 2 basis points to end the day at 2.35%. Gold continued its recovery, while the US dollar (UUP) extended its losses by giving back -0.29%.

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Dow Registers Another Record Finish; FOMC Minutes And Earnings Season On Deck

Ulli Market Commentary Contact

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

And the beat goes on. The major indexes shot up right after the opening bell, retreated during mid-day and rallied into the close but with only the Dow managing to squeeze out another record; its 47th for 2017. A big assist came from Walmart (WMT), which gained +4.43% on the day and produced the biggest boost on the Dow.

In ETF space, green was the dominant number with Emerging Markets (SCHE) being the leader with a gain of +0.99%, which was closely followed by International SmallCaps (SCHC) adding +0.95% and International Equities (SCHF) logging in +0.84%. The only red we saw was with Aerospace & Defense (ITA), which surrendered a negligible -0.04%.

The 10-year yield pulled back 2 basis points to close at 2.35%. Gold and crude oil popped while the US dollar (UUP) dropped (-0.53%). UUP is now in danger of breaking its 50-day M/A to the downside, which would mean a resumption of the bearish trend.

The main focus for the remainder of this week will be the release of the FOMC minutes from the September meeting. As always, should the interpretation be more hawkish (higher rates) than assumed, increased volatility may visit equity markets again. The other focal point will be the beginning of third quarter earnings season, and we will find out if the current elevated prices of equities are justified.

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Drifting Below The Unchanged Line

Ulli Market Commentary Contact

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

With bond markets closed today, equities lacked direction and meandered below the unchanged line with downward momentum accelerating late in the session. However, in the end, the losses for the major indexes were relatively minor.

The biggest losers were retailers, financials and healthcare, the latter of which suffered from weekend reports that Trump would seek to loosen regulations, which could lead to lower premiums. That would be a good thing for the population but a bad thing for companies’ profits.

In the ETF arena, the picture was mixed. We saw Semiconductors (SMH) outperform by gaining +0.73%, with Aerospace & Defense (ITA) logging it second place with +0.19%. Leading to the downside was US SmallCaps (SCHA) with -0.35% while MidCaps (SCHM) followed closely behind with a loss of -0.26%.

Gold had an up day, but still hovers below its $1,300 level. Oil rallied but failed to break above its $50 marker, while the US Dollar (UUP) traded in a tight range and ended up losing -0.16%.

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