Maintaining Upward Momentum

Ulli Market Commentary Contact

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

Even though today’s gains were modest, they were gains nonetheless. The major indexes continued their ascent into record territory despite a slow start right after the opening. However, in the end, the S&P 500 posted its sixth consecutive day of gains.

Private sector employment slowed from September with 150k jobs added. All eyes are now on Friday’s nonfarm payroll report, the outcome of which could drive markets higher. On the other hand, no matter what the number, the markets may rally anyway; it’s just the “new normal” type of environment we’re in.

The shocker of the day and the moment of truth came from SmallCaps, which actually ended the day lower with the Russell 2000 diving an incredible -0.25%, its worst drop in over a month… of course, I am being facetious…

In ETF land, the picture was mixed but the outcome of the session was overall positive. The Aerospace and Defense ETF (ITA) came in first place with a gain of +0.31%. Second place was a tie with Semiconductors (SMH) and Emerging Markets (SCHE) each adding +0.15%. Closing in the red was the Transportation Index (IYT) with -0.49% and US SmallCaps (SCHA) with -0.22%.

Interest rates changed immaterially, gold edged higher, oil slipped back below $50, and the US dollar (UUP) pulled back a tiny -0.12%.

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Gaining Steam Late In The Session

Ulli Market Commentary Contact

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

After some early aimless meandering, although above the unchanged line, the major indexes picked up some steam late in the day to book another round of records. The Dow, the Nasdaq, the S&P 500 and the Russell all registered all-time highs.

You can find a lot of reasons for and against a continuation of this rally, but the fact remains that right now the bulls are clearly in charge. Some recent manufacturing data have supported the positive view on stocks along with continued hopes for Trump’s tax cut ideas.

Still, some think that the advance YTD has been overdone. No question about it, but no one has the answer as to when the inevitable turnaround will happen; we’ll simply follow the major trend until it ends and our exit strategy tells us to step aside.

In the ETF arena, we saw nothing but green numbers, at least in those funds we currently own. Emerging markets (SCHE) took the lead with a solid +1.45% gain, followed by Transportations (IYT) with +0.70%. Lagging the bunch were SmallCaps (SCHA) with +0.22% and Aerospace & Defense (ITA) with +0.01%.

Interest rates dropped a tad allowing the 20-year bond (TLT) to bounce off its recently made bottom by gaining +0.10%. Gold was pretty much unchanged and appears to be glued to its 100-day M/A. The US dollar index (UUP) traded within a tight range and ended up dropping an insignificant -0.04%.

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Equities Rocket Higher In Face Of Mass Shooting

Ulli Market Commentary Contact

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

Right now, it seems that nothing can stop the northerly path of equities. Despite the police brutality associated with the Catalonian secession vote in Spain over the weekend and last night’s mass shooting in Las Vegas, the major indexes started the day in positive territory and resumed a steady run-up throughout the session. New records were set for the Dow, Nasdaq, S&P 500 and Russell 2000.

It appears the main driving force is nothing but unbridled optimism about the fourth quarter along with high earnings expectations for the just passed third quarter. Despite doubts as to whether Trump’s tax plan can still be voted on and/or passed this year, in its current form, the fact that this plan even exists seems enough to wet a trader’s bullish appetite.

In regards to ETFs, we saw SmallCaps (SCHA) taking the lead with a solid gain of +1.11% followed by MidCaps (SCHM) with +0.64%. Not crossing the unchanged line to the upside were Transportations (IYT) and Emerging Markets (SCHE) with tiny losses of -0.15% and -0.07% respectively. Interest rates rose with the yield on the 10-year Treasury bond climbing 2 basis points to 2.33%. That caused the US Dollar (UUP) to gap higher +0.58%; a level that is now clearly above its 50-day M/A and indicates a short-term uptrend.

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One Man’s Opinion: QE Unwind Starts Oct. 1. Rate Hike In Dec. Low Inflation, No Problem.

Ulli Market Review Contact

By Wolf Richter

The two-day meeting of the FOMC ended on Wednesday with a momentous announcement that has been telegraphed for months: the QE unwind begins October 1. It marks the end of an era.

The unwind will proceed at the pace and via the mechanisms announced at its June 14 meeting. The purpose is to shrink its balance sheet and undo what QE has done, thus reversing the purpose of QE.

Countless people, worried about their portfolios and real estate investments, have stated with relentless persistence that the Fed would never unwind QE – that it in fact cannot afford to unwind QE.

The vote was unanimous. Even no-rate-hike-ever and cannot-spot-housing-bubbles Neel Kashkari voted for it.

The Fed also telegraphed that it could raise its target range for the federal funds rate a third time this year, from the current range of 1.0% to 1.25%. There is only one policy meeting with a press conference left this year: December 13, when the two-day meeting ends, remains the top candidate for the next rate hike.

This has been the routine since the rate hike last December: The FOMC decides to change its monetary policy at every meeting with a press conference: December, March, June, today, and December.

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ETFs On The Cutline – Updated Through 09/29/2017

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 283 (last week 278) 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 September 29, 2017

Ulli ETF Tracker Contact

ETF Tracker StatSheet

https://theetfbully.com/2017/09/weekly-statsheet-etf-tracker-newsletter-updated-09282017/

ENDING THE MONTH AND THE QUARTER ON A POSITIVE NOTE

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

Equities closed out the week, month and quarter on a positive note with the S&P, Nasdaq and Russell 2000 ending not only at their highs of the session but also setting new records in the process. In terms of milestones for 2017, it’s noteworthy that the S&P 500 closed at a record for the 39th time this year, while the Nasdaq topped that number by notching 50 record closing highs. Most of the buying was based on the fact that Trump finally announced his long-awaited tax reform plan and that some of it might finally be implemented, although it’s unclear as to how much of this is based on relief rather than political reality.

Despite a slow start, our ETF holdings picked up steam late in the session with all of them closing solidly in the green. Emerging Markets (SCHE) took top billing, after a couple of slow days, with a gain of +1.13%, which was followed by the high flying Semiconductors (SMH) with +0.93%. The low man on the totem pole was the Dividend ETF (SCHD), which managed to eke out +0.06%.

Interest rates rose with the 10-year bond yield gaining 2 basis points to end the day at 2.33%. We saw sliding interest rates during July and August (hitting a low of 2.05%), but September proved to be a reversal month with rates ascending. Investors in the 20-year bond (TLT) saw losses pile up as “risk was on” and equities were the place to be.

The US dollar (UUP) had a good week by adding about 1%, which was its biggest weekly gain since last December; it was higher for the month as well but only by a fraction of a percent. The intermediate trend is up, but the long-term trend remains down.

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