10-Year Bond Yield Pumps And Equities Dump

Ulli Market Commentary Contact

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

A host of news events combined forces to pull equities off their lofty levels with the S&P 500 having its worst day in 5 months, while bonds had their worst day in 6 weeks. First, there were the NAFTA negotiations, which appeared to be progressing well, but the fly in the ointment was that there was no willingness to issue a joint statement thereby putting pressure on the stock market early on.

The VIX spiked and did not pull back and, with the market manipulators apparently asleep at the wheel, closed at its highest since August. Then rising interest rates kicked in with the 10-year bond yield jumping 4 basis points to close at 2.70% (intra-day to 2.72%) its highest level since April 2014. A variety of individual stocks took a noticeable dive such as WYNN (Steve Wynn sex scandal), AAPL (iPhone X orders slashed) and CAT (declining margins), all of which gave the bears the upper hand—at least for this day.

However, in the bigger scheme of things today’s pullback is hardly worth mentioning when considering the rapid market advances we’ve seen not only last year but during the first month of this year as well. With all this debacle going on, the US Dollar (UUP) managed to buck the overall negative trend by closing up +0.26%; a tiny bounce off its multi-year lows.

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ETFs On The Cutline – Updated Through 01/26/2018

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 249 (last week 244) 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 January 26, 2018

Ulli ETF Tracker Contact

ETF Tracker StatSheet

https://theetfbully.com/2018/01/weekly-statsheet-etf-tracker-newsletter-updated-01-25-2018/

 BEST START TO A YEAR FOR DOW AND S&P 500 SINCE 1987

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

Another day with solid advances for the major indexes (in the face of a rising VIX) as  the Dow, Nasdaq and S&P 500 gained for the 4th week in a row (and 9 for the last 10 for Dow and S&P 500). At the same time, the S&P eclipsed Goldman Sachs’s 2018 year-end-target of 2,850, which clearly demonstrates the value of forecasting. Hat tip goes to ZH for these historical nuggets.

As a result, gains were broadly spread, and the ETF space was no exception with green being the color of the day. Heading the leaders were Semiconductors (SMH) with an impressive +3.18% move higher. Lagging behind, but with solid gains nonetheless, was the Dividend ETF (SCHD +1.70%), Aerospace& Defense (ITA +1.31%) and Emerging Markets (SCHE +1.30%). Low man on the totem pole was US SmallCaps (SCHA) with +0.38%.

Interest rates rose with 10-year bond yield climbing 3 basis points to end at 2.66%. Intra-day, it attempted to break through the 2.67% level, but the glass ceiling held. Oil managed to rally while gold took a breather and pulled back. Ah, yes, and then there is the whipping boy of the past twelve months, namely the US Dollar (UUP), which had its worst start to a year since 1987 and continued its bad fortune by dropping another -0.21% on the day. But, the administration confirmed that we have a strong dollar policy. Go figure…

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Weekly StatSheet For The ETF Tracker Newsletter – Updated Through 01/25/2018

Ulli ETF StatSheet Contact

ETF Data updated through Thursday, January 25, 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 +5.26% after having generated a new Domestic Buy signal effective 4/4/2016 as posted.

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Whip-Saw Day Keeps Dow & S&P In The Green

Ulli Market Commentary Contact

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

Treasury secretary Mnuchin’s remarks pushed the dollar (UUP) even lower, but in the end, the day was saved by President Trump stepping in with the soothing words that Mnuchin’s statement was taken out of context and a long-term strong dollar policy was still the administration’s goal. This pumped the dollar back up, after the early dump, but it was only enough to hang on to a tiny gain of +0.13%.

On the equity side, we saw a roller coaster ride with the Nasdaq slipping a tad, but the Dow and S&P managed not only to eke out small gains but set new records as well. Still, market activity was predominantly sideways, which carried over to the ETF space as well giving us a mixed showing.

On the plus side, Aerospace & Defense (ITA) showed a solid performance with a gain of +1.50%. Distant followers were the Dividend ETF (SCHD +0.17%) and LargeCaps (SCHX +0.04%). Giving back some of their recent advances were Semiconductors (SMH -1.62%), Transportations (IYT -1.57%) and International SmallCaps (SCHC -0.44%). Interest rates dropped allowing the 20-year bond (TLT) to stage a nice rally by gaining +0.82%.

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One Man’s Jawboning Drags Down Markets; US Dollar Gets Clobbered

Ulli Market Commentary Contact

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

Things looked pretty hunky dory after the opening with the major indexes storming again into record territory. Then the hammer came down in form of Commerce Secretary Ross’s comments. Bloomberg reported as follows:

  1. ROSS: CHINA `SUPERB’ TALKING FREE TRADE, ACTING PROTECTIONIST
  2. ROSS: STEEL FORUM HAS MADE `ZERO DIFFERENCE’ FOR OVERCAPACITY
  3. ROSS: CHINA IS EXPORTING MORE STEEL THAN U.S. HAS IN CAPACITY
  4. COMMERCE’S ROSS: CHINESE IP REPORT WILL STILL `BE LITTLE WHILE’
  5. ROSS: IT WAS NO ACCIDENT THAT U.S. DIDN’T DROP TTIP W/ EUROPE
  6. ROSS: THERE’S GROWING RECOGNITION OF ACCUMULATED TRADE RISKS

That was enough to send the indexes reeling below the unchanged line. The afternoon rebound attempt limited the downside damage, but the Nasdaq fell short of getting back to green numbers. Sure, some exhaustion may have set in as well with equities having been on a non-stop run this year in addition to the substantial gains of 2017.

Today’s whip-saw left a mark in the ETF space as well, where losers outpaced winners. Semiconductors (SMH) came off its torrid pace and surrendered -2.03%. Transportations (IYT -1.44%) followed suit and to a lesser degree SmallCaps (SCHA -0.45%). On the plus side, we saw Emerging Market (SCHE) leading with +0.89%, joined by the Financials (XLF +0.67%) and Aerospace & Defense (ITA +0.54%).

Interest rates headed higher again with 10-year bond yield gaining 2 basis points to 2.65%. Continuing the bullish theme was oil and gold, while the US Dollar (UUP) was taken out to barn and spanked at the tune of -0.98%, its lowest price since November 2014. In  the past 12 months, UUP has now lost -13%.

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