ETF Tracker Newsletter For February 9, 2018

Ulli ETF Tracker Contact

ETF Tracker StatSheet

https://theetfbully.com/2018/02/weekly-statsheet-etf-tracker-newsletter-updated-02-08-2018/

 RIDING THE ROLLER COASTER—AGAIN

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

The session started out with an early bounce that slowly but surely deteriorated, but some mysterious buyers stepped in late in the day to push the indexes back above their unchanged lines. It must have been bottom fishers, as the S&P 500 had just broken its 200-day M/A to the downside. Still, for the week, the markets posted their largest weekly drop since early 2016. The current chaos was spread widely with equity flows recording their biggest swing ever: Record inflow 2 weeks ago to record outflow from equity funds this week.

As the markets were starting to look dicey mid-day, I took the opportunity to liquidate those holdings (locking in a profit) that were on my list after having broken through their trailing sell stops. In my mind, there are only 3 things that can happen now:

  1. The markets continue to be chaotic and work their way lower by pushing our Trend Tracking Indexes into bear market territory. Should that happen, our sell stop exit strategy got us out in time before things got worse.
  2. The markets are indecisive and volatile and establish a sideways pattern with no clear direction in sight. However, eventually a break out, either up or down, will occur.
  3. The markets are finding a bottom here, and the major indexes resume their upward trend towards their old highs. In this case, the liquidation of our ETFs generated by our sell stop strategy was false and/or premature, and I will have erred on the side of caution. Having seen my share of market disasters over the past 30 years, I’d rather be a day early than a day late.

We will now have to wait and see if our remaining positions will get stopped out and if my 3 scenarios will start to play out next week.

Read More

Weekly StatSheet For The ETF Tracker Newsletter – Updated Through 02/08/2018

Ulli ETF StatSheet Contact

ETF Data updated through Thursday, February 8, 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 +1.00% after having generated a new Domestic Buy signal effective 4/4/2016 as posted.

Read More

Market Dominators: Volatility And Rising Bond Yields; Dow Enters Correction; TTIs Barely Remain In Bullish Territory

Ulli Market Commentary Contact

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

As I mentioned yesterday, volatility (VIX above 35) and rising bond yields, which spiked during a weak auction and spooked equities, combined to give the bears the upper hand as the major indexes fell off a cliff with the Dow entering correction territory. ZH summed it up perfectly:

As a reminder, the ‘good’ news of a budget deal and no government shutdown means higher deficits and more Treasury supply, and with The Fed out of the bond-buying game, the search for the marginal buyer continues to push rates higher.

10% Correction Levels:

  1. Dow 23954 – Dow closed at 23860 is in correction
  2. S&P 2585 – S&P closed at 2581 in correction
  3. Nasdaq 6755 – Nasdaq closed at 6777, not in correction

Needless to say, there were no green numbers to be found, and there was no place to hide. The markets may remain volatile, as long as the upward pressure on bond yields does not subside. The 10-year yield rose only 1 basis point to 2.85% but the fear of potentially more upward momentum is what keeps the markets from stabilizing.

Our Trend Tracking Indexes (TTIs) dropped sharply (see section 3) and are barely staying above their respective trend lines. Additionally, most holdings are dancing around their sell stops and will be liquidated tomorrow, unless I see some market stability or a rebound, in which case I will hold off another day. A slip into bear market territory is now a distinct possibility.

Read More

An Early Rally Fizzles As Bond Yields Rise

Ulli Market Commentary Contact

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

The session started out with the bullish sentiment intact from yesterday’s rebound but ended with the bears taking over causing the major indexes to close at the lows of the day. The cause was “yield creep” as rates continued their march higher with the 10-year yield climbing 5 basis points to end the day at 2.84%, a level that was reached last Friday when the mini-crash began. In other words, the tug-of-war between bulls and bears could very well continue with volatility being our companion for a while.

The ETF space we’re involved in can be best described as mixed. Closing in the green was Aerospace & Defense (ITA +1.36%), Transportations (IYT +0.28%) and Financials (XLF +0.07%). On the downside, Emerging Markets (SCHE -2.80%) led with Semiconductors (SMH -2.64%) in close pursuit giving back some of yesterday’s large gains.

Commodities in general were spanked, while the US Dollar (UUP) continued its mini-rebound by gaining a solid +0.77%. As interest rates rise, bonds are getting clobbered with the widely held 20-year TLT losing another -0.95% and reaching a level last touched in May 2017.

Read More

Seesaw Session Favors Bulls; Short Squeeze Pushes Dow Up 600 Points

Ulli Market Commentary Contact

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

It was another wild ride in the markets, as the indexes spent most of the session sharply vacillating around the unchanged line. Volatility picked up and price action was so violent during times that it was almost impossible to get a read on an ETF price for more than a fraction of a second. During the last hour, the shorts were squeezed helping the indexes to move solidly higher.

As ZH reports, the VIX traded above 50 overnight before going dead, crashing, ramping and generally being chaotic. The Dow ended up 568 points but went through some enormous point-swings intraday – from the cash close last night, Dow -1400, +1000, -600, +1100, -500, +400, -300, +600…

In the end, the bulls prevailed, and we saw some nice gains in ETF space along with only green numbers. Leading the group were Semiconductors (SMH +3.68%), Emerging Markets (SCHE +2.84%) and International Equities (SCHF +2.09%). Low man on the totem pole were MidCaps (SCHM +0.84%). Interest rates were climbing again with the 10-year yield adding 2 basis points to 2.79% up from an intra-day low of 2.71%. The US Dollar whip-sawed but closed up +0.21%.

It’s too early to tell if today was the end of this correction. Rapid sell-offs can often be followed by quick and sharp bounce backs, however, as trend followers we are more concerned with the direction of the major trend, which remains up. Needless to say, I did not liquidate any of our potential sell-stop candidates.

Read More

Market Dumps As Volatility Pumps; Buy Signals Remains Intact

Ulli Market Commentary Contact

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

After last week’s pullback, today’s session had the major indexes hovering slightly below their unchanged lines right after the opening, when suddenly at mid-day the floodgates opened and equities went into freefall mode. Of course, the reason was not that individual investors all of a sudden decided to sell, but the more likely was catalyst that the computer algos played ping-pong and pushed equities south. Besides, we’ve come way too far too fast in terms of past year’s rally that a correction was way overdue.

As ZH reports, in terms of records, this was the biggest drop for the S&P 500 since August 2011 and the 410-day record streak without a 5% correction is over. Nasdaq is over 7% off its highs; Dow & S&P are over 8% off their highs. The VIX exploded to reach 37, which is quite a jump from the lows of just above 9 back in November.

One of the causes of the increased volatility has been the spike in interest rates since last September. Today, the 10-year yield jumped again touching 2.84% intra-day but pulled back to close down 7 basis points to end at 2.77%. Again, bucking the trend was the US Dollar (UUP), which has been in a bear market for the past year, but managed to bounce higher by +0.43%.

Our Trend Tracking Indexes (TTIs) remain on the bullish side of their respective trend lines (see section 3 below) but several of our trailing sell stops were triggered for some of our holdings and will be liquidated tomorrow. That is, unless a rebound rally is in the making in which case I will hold off another day.

Read More