ETF Tracker Newsletter For December 1, 2017

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ETF Tracker StatSheet

https://theetfbully.com/2017/11/weekly-statsheet-etf-tracker-newsletter-updated-11302017/

SLIPPING FOR THE DAY BUT GAINING FOR THE WEEK

 

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

The equity markets derailed this morning and plunged after headline reports that Trump’s former national-security advisor promised not only “full cooperation with the Mueller team” but that he is also prepared to testify that as a candidate, Donald Trump “directed him to make contact with the Russians.” That was all it took and south we went in a hurry as the chart above shows. Despite this element of uncertainty, the major indexes managed to climb back during the remainder of the session but fell short of crossing the unchanged line to the upside. Still, the Dow managed to have its best week of the year.

The tech wreck continued handing Semiconductors (SMH) another loss of -0.87%. Aerospace & Defense (ITA -1.44%) suffered as well along with Emerging Markets (SCHE -0.76%. Sporting the only green numbers for the day were Financials (XLF +0.22%) and International SmallCaps (SCHC +0.11%).

Interest rates slipped with the yield on the 10-year bond retreating 5 basis points to 2.37%. The high yield arena suffered with HYG trading in wide range, gapping down and losing -0.46% after a few days of calmness. The US dollar (UUP) also whipsawed and closed slightly lower for the day but managed, after 3 weeks of losses, to close higher for the week by +0.17%.

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Weekly StatSheet For The ETF Tracker Newsletter – Updated Through 11/30/2017

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ETF Data updated through Thursday, November 30, 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 +3.80% after having generated a new Domestic Buy signal effective 4/4/2016 as posted.

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Tax Plan Optimism Sparks Rally

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com] 

  1. Moving the markets

And the beat goes on. Optimism about the tax plan prospects went into hyper drive with John McCain appearing to be the catalyst by casting his “YES” vote convincing traders that a tax reform may actually happen. That motivated the bullish crowd, and the major indexes jumped. Even though we came off the highs mid-day, it was enough for the Dow to register its longest streak of monthly gains in 22 years.

In ETF space, we saw gains of varying degrees across the board. Following through on yesterday’s top performance of +3.4% were Transportations (IYT), which added another +2.01%. That was followed by Aerospace & Defense (ITA) and the Dividend ETF (SCHD) with +1.25% and +0.94% respectively. Not being aligned with today’s bullish theme were Emerging Markets (SCHE) with a loss of -0.76%.

Interest rates rose sharply with the 10-year bond yield jumping 5 basis points to 2.42%. Gold got spanked again and lost -0.74%. Every time the yellow metal is in danger of breaking through its $1,300 marker, it gets slammed down thanks to the manipulated derivatives markets on the COMEX. The US dollar (UUP) managed to recover some of its early losses but still closed down -0.25%.

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Tech Proves To Be A Drag On The Markets

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com] 

  1. Moving the markets

It’s really no surprise that the best performing sector of 2017 had to eventually come off its lofty levels and back to reality. That moment was today as, despite nine of the 11 S&P sectors gaining, Semiconductors (SMH) took a hit at the rate of -4.24%. Autodesk (ADSK) announced some earnings and restructuring plans that left the tech sector in the dust—at least for the day. However, considering that SMH was up over 45% YTD, a pullback like this had to be expected.

On the other side of the spectrum, the Dow ignored the bad news and sprinted again into record territory, while the S&P was not quite able to climb above the unchanged line. The ETF space affecting our portfolios was mixed and other areas made up for the Nasdaq’s weakness. Leading to the upside were Transportations (IYT) with a chest pounding +3.40% gain, which was followed by the Financials (XLF), which advanced +1.71%. Besides the Semiconductors dropping, we saw Emerging Markets (SCHE) surrendering -1.53%.

Interest rates rose with the yield on the 10-year bond gaining 3 basis points, which was enough to send the price of the 20-year bond (TLT) sharply lower by -0.99%. The effect on the High Yield sector (HYG) was only moderate with a loss of -0.13%. In a repeat from yesterday, both gold and oil slipped again while the US Dollar (UUP) traded in a tight range and ended up giving back -0.04%.

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Shifting Into Overdrive

Ulli Market Commentary Contact

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

Momentum for equities shifted into overdrive supported by two events. First, Trump’s nominee to run the Federal Reserve, Jerome Powell, testified at a Senate confirmation hearing that “he expects to stay on the course” set by the current Fed chief Yellen. Obviously, these were words that traders wanted to hear and off to the races we went. Second, the Republican tax proposal moved a step closer to a vote in the Senate.

Even geopolitical tensions couldn’t put a damper on the bullish mood and recently recorded records for the indexes were quickly replaced by a new dash into uncharted territory. As a result, green was the favorite color of the day in ETF space. Leading the charge were the Financials (XLF) with +2.60% having its best showing in 8 months. Coming in second and third were Transportations (IYT +1.72%) and US SmallCaps (SCHA +1.44%). Even though the Nasdaq advanced, our winner YTD, namely Semiconductors (SMH), lagged behind with a tiny loss of -0.09%.

The yield on the 10-year bond rose 2 basis points to 2.34%, while the High Yield complex (HYG) calmed down from yesterday’s wild swings and rallied +0.31%. The US Dollar (UUP) showed strength for the second day in a row and added +0.41%. Gold and Oil both slipped immaterially.

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Dow Bucks The Trend As Upward Momentum Slips

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com] 

  1. Moving the markets

Right after the opening bell, the major indexes stormed into record territory but succumbed mid-day and turned this session into a non-event with only the Dow clinging on to close in the green. Despite warnings about the market’s lengthy run without a meaningful correction, traders focused on technical factors supporting their bullish view such as that the S&P 500 has been firmly entrenched above its 200-day M/A for the last year. Actually, the last time the S&P came within striking distance of breaking below it was February 2016.

The mixed picture continued in ETF space as well where we saw more losers than winners. Closing barely in the green was the Dividend ETF (SCHD +0.10%) and Aerospace & Defense (ITA +0.06%). On the downside, Semiconductors (SMH) were leading with -1.55% followed by Emerging Markets (SCHE -0.92%) and International SmallCaps (SCHC -0.73%).

While interest rates were mixed most of the action happened in the High Yield market which, after having rebounded the past 6 trading days, showed signs of weakness (higher rates), as HYG headed south again and lost -0.31%. Gold climbed all the way up to $1,299 until manipulation set in, and the yellow metal was pushed down again. The US dollar (UUP) made a V-shape recovery, after early losses, and gained +0.12%.

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