Markets In Disarray

Ulli Market Commentary Contact

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

Right after the opening bell, there was no question as to which direction the markets would head as bulls were noticeably absent and weakness spread to most sectors. Anxiety was caused by a tech sell-off sparked by Facebook (FB), now also known as Faceplant, after the social media giant lost -6.77% and took the Nasdaq down.

Not only was FB’s drop its worst in some four years, it also did some chart damage by its price closing below its 200-day M/A for the first time since 1/5/17. The cause of all this were concerns about their management of user data, which can be loosely translated as “who all had access to their user data base?”

While these alleged misdeeds affected the entire market, it remains to be seen whether this will turn out to be just a company specific issue, and blow over quickly, or whether it will continue to cast a dark cloud over equities in general. Be that as it may, we should have that answer within a few days.

Not helping matters was continued nervousness and anxiety about the upcoming Fed meeting Tue/Wed under the new chair Jerome Powell. He is known to have a more hawkish view on rates and it is feared that he may favor four more hikes this year rather than the expected three.

Most likely, volatility will be with us until some of this uncertainty has been removed at which time we can put our focus back on the various trade war scenarios. Stay tuned.

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ETFs On The Cutline – Updated Through 03/16/2018

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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 204 (last week 221) 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 March 16, 2018

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ETF Tracker StatSheet

https://theetfbully.com/2018/03/weekly-statsheet-etf-tracker-newsletter-updated-03-15-2018/

 ENDING THE WEEK ON A POSITIVE NOTE

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

Not only did the S&P 500 break its losing streak on day 5, but the major indexes managed to eke out a green close for the session but ended down for the week.  As I mentioned daily, the potential trade wars, along with the game of musical chairs in the White House, were sufficient to hold the bulls in check. Today’s gains were small but broad with 9 of the 11 S&P sectors closing higher as Energy lead while Tech and Consumer Discretionaries lagged. The top economic headline had to be dismal housing sales data, of which not much was reported in MSM. More details here.

In ETF land, winners and losers for the day just about balanced each other out. Leading the pack were the Dividend ETF (DVY +0.65%) followed by MidCaps (SCHM +0.47%) and LargeCaps (SCHX +0.09%. On the downside, we saw International SmallCaps (SCHC -0.32%) along with Aerospace & Defense (ITA -0.23%) and Emerging Markets (SCHE -0.20%).

In the all important interest rate arena, the 10-year bond yield rose by 3 basis points to end the week at 2.85%, which is only 9 points away from its recent 4-year high of 2.94%. This level has recently been proven to be a point that, once reached, may spell trouble for equities again.

Since the beginning of March, we have been climbing in an ascending pattern (S&P 500), which has kept us on the plus side for the month despite this week’s sell-off. Should the tough trade-war talk headlines be softened or amicable solutions be found, I would expect the major indexes to resume their bullish pattern; at least on a short-term basis.Read More

Weekly StatSheet For The ETF Tracker Newsletter – Updated Through 03/15/2018

Ulli ETF StatSheet Contact

ETF Data updated through Thursday, March 15, 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 +3.43% after having generated a new Domestic Buy signal effective 4/4/2016 as posted.

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Lingering Trade-War Fears Keep Market Jitters Alive

Ulli Market Commentary Contact

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

It was a mixed bag with the Dow managing to overcome a 3-day losing streak while the S&P & Nasdaq hovered on both sides of the unchanged line but slipped slightly into the red. The markets are still trying to digest Trump’s comments from yesterday that his administration intends to trim the trade deficit with China to $100 billion (from the current $375 billion).

While some economic data points indicated improving conditions, none of these made an impression on the markets as most of it was already priced in. As a surprise to some analysts, the import price index rose 0.4% in February, after an even higher increase in January, which reflects higher prices we are paying for foreign goods. Let’s wait and see the effects of the trade wars on this index, which is bound to make far larger moves than we’ve seen so far.

Interest rates rose slightly with the 10-year bond yield adding 1 basis point to 2.82%, while the Dollar Index (UUP) jumped higher by +0.38% most likely due to Trump’s new economic advisor, Larry Kudlow, trying to make a name for himself by dispensing the investment advice to “buy the dollar and sell gold.” Yeah, right…

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Igniting Trade-War Worries Punish Markets; GDP Forecast Slammed

Ulli Market Commentary Contact

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

A host of headlines appeared to punish the markets by pushing the major indexes down for the third day in the row. First, there was more jawboning about tough trade talk with China, as the administration announced a $100 billion annual China deficit target from last year’s $375 billion. Of course, retaliation is expected with one of the victims very likely being Boeing, whose stock subsequently got hammered for the second day in a row, which did not bode well for the Dow.

Then there was the matter of the GDP, as the Atlanta Fed (along with Goldman) slashed its forecast from its wild expectations of 5.4% down to a meager and far more realistic 1.9%, in part due to ever weakening retail sales, which had it worst declining streak since 2015. That was enough to take away some of the early bullishness and south we went. Despite a mid-day hiccup, the session was clearly dominated by the bears.

The Producer Price Index (PPI) had wholesale inflation up +0.2% in February (vs. +0.1% expected), but that was down from the 0.4% advance in January.

The VIX rallied above 17 and did its part to keep the markets in check. Interest rates dropped with the 10-year bond yield declining 3 basis points to 2.81%. The US Dollar, which sank for the 3 days in a row, managed to buck its trend by gaining +0.04%.

Overall, there was no news that could have boosted the markets. However, some ETFs in our portfolios withstood the negative sentiment as Semiconductors (SMH +0.05%), International ETFs (SCHF +0.26%) and International SmallCaps (SCHC +0.32%) managed to end this session in the green.

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