Ulli... The ETF Bully

ETFs On The Cutline – Updated Through 07/07/2017

Ulli Saturday, 8 July 2017, 6:34 AM ETFs on the Cutline Contact

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 246 (last week 276) 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 July 7, 2017

Ulli Friday, 7 July 2017, 3:29 PM ETF Tracker Contact

ETF Tracker StatSheet

https://theetfbully.com/2017/07/weekly-statsheet-etf-tracker-newsletter-updated-07062017/

ROLLER-COASTER WEEK ENDS ON A POSITIVE NOTE

[Chart courtesy of MarketWatch.com]

Moving the Markets

A roller-coaster week ended on the plus side with the S&P 500 squeezing out a 2 point gain after recovering from yesterday’s sell off. A better than expected jobs number supported equities with the employment report showing that 222,000 jobs (vs. 179k expected) were added in June. The unemployment rate ticked up to 4.4% from 4.3%.

While the number made a good headline and sparked bullish optimism, the devil was in the details. While it helped that April and May payrolls were revised upward, and added +47,000 more than reported it also may validate the Fed’s hawkish bias, meaning more rate hikes may be forthcoming in the future, an outcome which will affect equities negatively at some point.

Also, wage growth disappointed with a hike in average hourly earnings of only +0.2%, while the number was revised lower for May from +0.2% to +0.1%. So, where were most of the jobs generated? Health care took the lead with +37,000, which was closely followed by business and professional services (+35,000). The third place was occupied by low end food services and drinking places (+29,000) confirming that the waitress and bartender jobs are continuing their trend higher having generated 277,000 positions over the year.

Interest rates continued their upward trajectory with the 10-year bond yield rising by 2 basis points to 2.39%, its highest spot since early May. The Dollar index, as represented by UUP, managed to bounce +0.16% after having dropped 2 straight days. Oil slipped -2.59% while gold had a bad week and dropped to March lows.

Weekly StatSheet For The ETF Tracker Newsletter – Updated Through 07/06/2017

Ulli Thursday, 6 July 2017, 6:33 PM ETF StatSheet Contact

ETF Data updated through Thursday, July 6, 2017

Methodology/Use of this StatSheet:

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.
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.

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.

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 +2.70% after having generated a new Domestic Buy signal effective 4/4/2016 as posted.

Bonds, Equities And Dollar Drop As Interest Rates Rise

Ulli Thursday, 6 July 2017, 3:17 PM Market Commentary Contact

[Chart courtesy of MarketWatch.com]

Moving the Markets

The debacle started in Europe, as ugly bond auctions in France and Spain set a negative tone for the day, which quickly spread across the Atlantic pushing US interest rates higher (and bond prices lower) while pulling equities off their lofty levels with the Nasdaq surrendering -1%.

Not helping was the German Bond (Bund) yield ripping higher to 0.562%, which is low by US standards, but is the highest since January 2016, causing most European equities to hit the skids as well. Adding to the uncertainty and nervousness in general were news reports from the G-20 meeting in Hamburg including protesters fighting with police.

Risk parity funds, which switch their investments from stocks to bonds and vice versa, depending on which asset class displays more bullish tendencies, got caught in the trap, I have written about before, namely, that “what happens if stocks and bonds drop at the same time?”, a scenario we are witnessing right now causing these entities to go into “unwind” mode.

The 10-year bond yield shot up 4 basis points to 2.37%, its highest reading since the beginning of May. The US dollar went the other way with the widely followed UUP giving back some of its recent gains by ending down -0.44%. Gold closed slightly higher but is still struggling to reclaim its 200-day M/A.

Nasdaq Outperforms; Energy Sector Gets Slammed

Ulli Wednesday, 5 July 2017, 3:34 PM Market Commentary Contact

[Chart courtesy of MarketWatch.com]

Moving the Markets

It was a tale of two markets as the Nasdaq was propelled higher with semiconductors (SMH) reversing their recent downtrend by charging ahead +1.90%. The Dow closed about unchanged, while the S&P 500 managed to eke out a small gain of +0.15%.

Things looked ugly in the energy sector as oil got hit hard and lost -4.31% following Russia’s announcement that it no longer would support output cuts. In fact, the entire energy sector got slammed with the widely followed XLE dropping -1.95%, its worst loss in 4 months.

Interest rates pulled back with the 10-year Bond now yielding 2.24% down -0.85% or 2 basis points from Tuesday. The US dollar managed a slight rebound for a 3-session gain off the 9-month lows made in late July.