Market Sentiment Turns Jittery

Ulli Market Commentary Contact

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

For the second day, market nervousness prevailed, as concerns ahead of the UK general election, uncertainties about ex-FBI chief Comey’s upcoming testimony to the Senate, along with a Thursday ECB policy meeting, kept the major indexes subdued and stuck below their respective unchanged lines. However, as was the case yesterday, the pullback was minor.

Interest rates took another dive with the 10-year T-Bond losing 4 basis points to now yield +2.14%, which is a substantial drop from the beginning of March 2017 when the yield had reached +2.62%. What does it mean? Simple, if yields slide at this pace, it usually is a sign that the economy is heading towards a recession which, when reviewing the downright atrocious and worsening economic data points, appears to be a reasonable conclusion. The question seems to be not “if” but “when.”

The US dollar (UUP) followed suit by slipping -0.24% to a level last seen early October 2016. As is no surprise, this weakness has benefited gold, which is now in striking distance of reclaiming the $1,300 marker, which is a number gold has not been able to reach since around Election Day.

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Slipping Off The Record Highs

Ulli Market Commentary Contact

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

Geopolitical uncertainties, such as the London terrorist attack and the upcoming testimony of former FMI chief Comey, combined to pull the starch out of last week’s upward momentum. Not helping matters was the continuing weakness in the US Macro data index, which has slipped now to its lowest level since February 2016 when the markets were collapsing amid global recession fears.

To be clear, the pullback was tiny when looking at the bigger scheme of things and hardly worth mentioning. The major indexes traded in a tight range showing weakness into the close with especially SmallCaps being the laggard of the session.

Despite an early really, bank stocks reversed giving up most of their gains as interest rates dropped with the 10-year yield slipping 6 basis points not only end the day at 2.15%, its lowest since November 2016, but also breaking its 200-day M/A to the downside. The Dollar index (UUP) edged up a tad but remains at lows last seen in October 2016.

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One Man’s Opinion: …And Now For The Bad News

Ulli Market Review Contact

By Simon Black

In the late 1760s and early 1770s, the government of France was in a deep panic.

They had recently suffered a disastrous and costly defeat in the Seven Years War, and the national budget was a complete mess.

France had spent most of the previous century as the world’s dominant superpower, and the government budget reflected that status.

From public hospitals to shiny monuments and museums, social programs and public works projects, overseas colonies and a huge military, France had created an enormous cost structure for itself.

Eventually the costs of maintaining the empire vastly exceeded their tax revenue.

And by the late 1760s, France hadn’t had a balanced budget in decades.

Debt was ballooning, interest payments were rising, and the government of Louis XV was desperate to do something about it.

There’s a famous story in which the Comptroller-General of Finances summoned all the government ministers to make deep budget cuts.

But no one could come up with anything substantial.

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ETFs On The Cutline – Updated Through 06/02/2017

Ulli 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 284 (last week 273) 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 June 2, 2017

Ulli ETF Tracker Contact

ETF Tracker StatSheet

https://theetfbully.com/2017/06/weekly-statsheet-etf-tracker-newsletter-updated-06012017/

SAME OLD STORY: ANY NEWS IS GOOD NEWS FOR THE MARKETS

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

After yesterday’s euphoric reaction to ADP’s private sector hiring report, reality set in this morning when the BLS released the May jobs report showing that only a disappointing 138k jobs were added in May, which was far below the estimated number of 185k. To add insult to injury, April’s chest pounding number of 211k was revised substantially lower to only 174k. Those numbers suggest that the Fed’s “evidence,” that the current economic slowdown was just “transitory,” blew up in smoke. Even March’s payrolls were revised down from 79k to 50k.

These figures alone should have sent the market into a corrective spiral, but no, in this new normal environment, any news is good for equities and up we went without looking back, allowing the major indexes to add to yesterday’s gains by making new all-time highs.

Then we saw some of these headlines:

  • Retail carnage continues as sector loses jobs for fourth straight month
  • Full-time Jobs Tumble by 367,000; biggest drop in three years
  • JPM: There is a cloud hanging over the equity rally, but stocks don’t seem to mind (for now)
  • Bof A: The “QE Monster” only ends when “The Wall Street Bubble” finally shocks the Fed
  • Deutsche Bank trader admits to rigging precious metals markets

None of these were exactly soothing, but there appeared to be simply no way today to bring the markets down or keep them from scoring new highs. Macro data along with hard and soft data had an ugly weak with soft data sinking to a 6-month low.

The yield on the 10-year Treasury collapsed to 2.15%, its lowest since the election, while the Dollar index (UUP) lost another -0.48%, a low which was last seen the beginning of October 2016. That helped gold continue its rally, and the metal is now honing in on the $1,300 level again.

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Weekly StatSheet For The ETF Tracker Newsletter – Updated Through 06/01/2017

Ulli ETF StatSheet Contact

ETF Data updated through Thursday, June 1, 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 +4.03% after having generated a new Domestic Buy signal effective 4/4/2016 as posted.

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