Indexes Flat But Nasdaq Notches A New Record

Ulli Market Commentary Contact

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

It was another non-eventful day in the markets with the Dow and S&P inching lower, however, the Nasdaq managed to eked out a new high. While earnings reports have been holding up, the spanking being dished out almost daily in the oil market along with opinions from the various Fed mouthpieces kept the markets in a tight trading range.

For sure, a new catalyst is needed to push markets higher, although these days just the absence of bad news could be enough to send the indexes nibbling at new all-time highs. However, given the almost daily load of deteriorating economic fundamentals, the odds are increasing that eventually gravity will take over and pull the indexes off their lofty levels down to a point that represents reality, which has been sorely lacking.

Has upside momentum started to slow down? It depends what indicators you look at. Our Trend Tracking Indexes (TTIs) represent the big long-term picture, and they are firmly entrenched on the bullish side of their respective trend lines. Of course, I am always looking for the canary in the coalmine that might give me some short-term indication of waning momentum.

One of those short-term indicators in regards to the S&P 500 is the change in the number of companies above their 50-day and 200-day moving averages. Take a look at this 6-month chart:

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Apple Hits $800 Billion Market Cap; Major Indexes Unchanged

Ulli Market Commentary Contact

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

The major indexes spent today’s session in a tight range and clung to the unchanged line for most of the day. The outcome of the French elections sparked a “sell the news theme,” but US markets were stuck in a no volatility environment as the VIX was pushed down to its lowest close since December 1993, if you can believe that.

That is a condition that simply can’t last for very long but controlling the VIX is a great tool to manage any potential market sell-offs and keeping the bullish hope alive. In the absence of such control, we may see a repeat of what happened from January to March 1994 when the VIX jumped from 9.59 to over 28; by the way, the S&P 500 fell 10% during that period.

Apple was the big dog today with its stock rallying 3% likely in part based on news that Warren Buffett had sharply increased his stake in the company during the last quarter. Apple contributed to adding around 30 points to the Dow and broke the $800 billion market cap for the first time.

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One Man’s Opinion: Waiter And Bartender Jobs Surge In The Land Of The Free

Ulli Market Review Contact

By Simon Black

The headline in the New York Times today read “U.S. Job Growth Bounces Back; Unemployment at 10-Year Low”.

That’s certainly one way of looking at it.

The US Department of Labor released its regular jobs report this morning showing the official unemployment rate is just 4.4% in the Land of the Free.

That’s certainly a strong number; I’m sure plenty of people in Venezuela and Turkey would love to have an unemployment rate at even twice that figure.

But when you actually dive into the statistics, the optimism starts to fade a bit.

It turns out that the #1 driver of job growth in the United States is “Leisure and Hospitality”, which is how the Department of Labor categorizes food service jobs.

That basically means waiters and bartenders.

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ETFs On The Cutline – Updated Through 05/05/2017

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 237 (last week 252) 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 May 5, 2017

Ulli ETF Tracker Contact

ETF Tracker StatSheet

https://theetfbully.com/2017/05/weekly-statsheet-etf-tracker-newsletter-updated-05042017/

TUG OF WAR: STRONG JOBS REPORT VS. FRENCH ELECTIONS

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

It was a tug of war as a strong jobs report battled for market direction against the uncertainty of the second and final round of the upcoming French elections. For the day, the on the surface positives of the jobs report were the winner as equities picked up some stream and closed higher with the S&P 500 knocking on the 2,400 milestone marker.

The jobs report showed that April payrolls jumped by 211,000 beating expectations and providing some relief after March’s disappointing revised 79,000 number. The disappointing part was that, despite strong jobs growth, hourly earnings were soft rising only 2.5% YoY vs. an expected 2.7%. So, why is it that in a labor market with alleged full employment wages simply can’t rise? The answer is clear and has to do with the quality of jobs, as most of them once again were in low or minimum-wage sectors aka waiters and bartenders.

ZH summed up today’s session as follows:

Massive liquidity issues in China wealth product liquidation, commodities crashing, oil plunging, US macro data disappointments, US earnings disappointments, and Buffett dumping Big Blue – only makes sense that The Dow just had its quietest 8 days since 1952!

US Macro data has negatively surprised for 7 straight weeks – dropping to its weakest since October…

Shown in a graph, it looks like this:

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Weekly StatSheet For The ETF Tracker Newsletter – Updated Through 05/04/2017

Ulli ETF StatSheet Contact

ETF Data updated through Thursday, May 4, 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 +3.41% after having generated a new Domestic Buy signal effective 4/4/2016 as posted.

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