Uncertainty Reigns; Dollar Gets Pummeled

Ulli Market Commentary Contact

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

Uncertainty and volatility reigned supreme as Secretary of State Tillerson’s meeting in Russia initially generated a small relief rally in the dollar with bond yields shooting higher. Then the hammer came down as Trump commented on a variety of issues including China and the overvalued US dollar. That was all it took, and the greenback headed south losing -0.50% as measured by the ETF equivalent UUP.

The morning spike in US Treasury yields came to an abrupt stop, reversed and rates dropped sharply with the 10-year yield ending at a 5-month low of 2.28%. The S&P 500 surrendered a milestone, namely its 50-day M/A, as it retreated by -0.38%. This was the S&P’s first close below its 50-day M/A since the election and is a sign of a weakening intermediate trend.

The big bank stocks (JPM, BAC, GS, MS) remained in tumble mode along with the tech sector, which has dropped now for the 9th straight day, its 2nd longest losing streak in 28 years. Hat tip goes to ZH for this stat. And the winner remains gold, which added another 1.15% to hone in on the 1,300 level.

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Geopolitical Uncertainty Supports Gold

Ulli Market Commentary Contact

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

As saber rattling continues to be the topic du jour, it’s no surprise that gold has been the main beneficiary by not just being the leader YTD for 2017, but also finally conquering its 5-month glass ceiling, namely its 200-day M/A. We’ll have to wait and see if current momentum can propel gold across its 1,300 level after having hovered below it since Election Day.

In terms of current hot spots and war mongering, ZH summed it up nicely:

  • US threatens North Korea
  • Everyone on the same side of the boat (long stocks, short volatility, short bonds, short Eurodollars)
  • US threatens Russia
  • Fed intent on tightening no matter what
  • China warns of red lines
  • Russia calls ‘false flag’, builds alliance
  • US threatens Syria
  • Increased frequency of terror attacks in Europe
  • Oh, and finally, Frexit looms as election in Europe are highly uncertain

 

Across asset classes, we saw the dollar weakening, oil rising, the 10-year Treasury yield slipping and equities desperately trying to get back to the unchanged line, which they almost managed to do after the early morning sell-off. The tech sector, however, continued to show weakness while bank stocks have given the words “one way street” (south) a new meaning since Trump’s speech to congress.

Things look a little wobbly right now and much focus is on the upcoming earnings season to see if new drivers can emerge to establish better upward momentum.

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Clinging To A Tiny Gain

Ulli Market Commentary Contact

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

We started the week on a positive note when suddenly the markets took a dive below the unchanged line, crawled back above it and then closed with a tiny gain. Stocks were spooked on news reports that China had amassed some 150,000 troops along the North Korean border, which was enough to take the starch out of this rally.

Not helping matters were Secretary of State Tillerson’s remarks that the military strikes against Syria regarding its alleged use of chemical weapons were a warning signal to other nations, like N. Korea, as saber rattling was elevated to the next level.

Energy shares managed to gain with oil adding +1.63% offsetting some of the losses in the financial sector, as we are waiting for the earnings season to start this week. The 10-year Treasury yield went nowhere and slipped 1 point while the 30-year lost its 3% milestone and closed at 2.99%. The US dollar bobbed and weaved within a tight range and ended up surrendering -0.16%.

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One Man’s Opinion: FOMC Admits The Stock Market Is A Bubble, Along With Many Other Asset Classes

Ulli Market Review Contact

By ZeroHedge

The much anticipated March FOMC minutes were released today (last Wed), and the minutes concluded exactly what I predicted in my last post titled “Is the Fed Trying to stop a “Market” that has gotten ahead of itself”. In it I said that the only reason they were raising rates unexpectedly is because they are trying to slow the bubble from getting any bigger.

The minutes confirmed that the February ‘out of nowhere talk’ of a rate hike, which led to a March rate hike, was all due to stocks and many other assets classes being a bubble.  FOMC officials are now openly admitting that their disastrous policies have created the largest asset bubbles in history, which has never been done before. On multiple occasions in years prior, many Fed officials, including former chair Greenspan, have openly said that it was very hard to spot asset bubbles in advance.

Now they are openly saying that they are seeing bubbles. Many current Fed officials share that same stupid viewpoint as Greenspan, including Kashkari, Fisher and Powell. Powell, just this past January at a conference in Chicago, said “low rates can lead to excessive leverage and broadly unsustainable asset prices – things that we watch carefully for and do not observe at this point.” So it was surprising to see the following In today’s minutes from the March meeting:

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ETFs On The Cutline – Updated Through 04/07/2017

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 241 (last week 231) 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 April 7, 2017

Ulli ETF Tracker Contact

ETF Tracker StatSheet

https://theetfbully.com/?p=18769&preview=true

WAR MONGERING AND POOR JOBS REPORT EQUAL UNCERTAINTY

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

While stock futures took a dive last night after Trump’s unveiling that he ordered the US military to lob some 59 tomahawk cruise missiles into Syria, things turned around this morning as it appeared that the conflict will likely be contained—at least for the time being.

Then the markets got hit with the worst jobs report in 11 months as only 98,000 jobs were added but the unemployment rate dropped to 4.5%. After a brief pullback, the usual ramp occurred but upward momentum did not hold, and the major indexes sold off late in the day to close a tad below the unchanged line.

Overall, it was a session marked by confusion with only gold and oil hanging on to some of their early gains. Interest rates surged with the 10-year Treasury yield gaining 4 points or +1.71%. With higher yield, the US dollar got a little boost and added +0.54% to finally conquer the 101 level again after having vacillated the past 4 weeks below it. In a sign of bullishness, it also managed to close above 50-day M/A.

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