Late Buying Pushes Markets Into Record Territory

Ulli Market Commentary Contact

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

The respective unchanged lines appeared to be the magnet for the major indexes throughout most of the session, as they bounced above and below it until late buying pushed them into the green for good, and we registered another record close. The gains were tiny, but they were gains nonetheless.

As the chart above shows, upward momentum stalled and it looked like traders were searching for a catalyst to drive stocks higher. Energy (XLE) and Consumer Discretionaries (XLY) led the charge with gains of +1.27% and +0.70% respectively. Across our holdings, the Dividend ETF (SCHD) performed best with +0.21%, while the Emerging Markets (SCHE) fared the worst with -0.62% resulting in an “unchanged” condition for most of our portfolios.

Interest rates continued their recent trend reversal with the 10-bond yield crawling 3 basis points higher to 2.20%, which is quite a turnaround from the recent September lows of 2.05%. Suffering from that event is the 20-year bond ETF (TLT), which continued its slide by losing another -0.39%. The US Dollar Index (UUP) headed north by closing up +0.59%, which is not only its 3rd straight day of gains but its largest in 9 months. However, when looking at the chart, it still looks to me like a dead cat bounce.

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Extending The Rally

Ulli Market Commentary Contact

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

After yesterday’s massive rebound, the major indexes continued with their bullish theme supported by Treasury Secretary Mnuchin’s words that he’s hopeful a tax overhaul can be accomplished by the end of the year. He also hinted that they’re considering backdating any reform to the beginning of 2017. That’s all it took, and stocks ended at record highs, although in zigzag fashion, however, without ever touching the unchanged line.

The Dow ended in the green, but would have done so with far more conviction had it not been for weakness in McDonalds (-3.22%) and Apple (-0.40%), the latter of which managed to wipe out most of its early losses, as the new iPhone launch could not meet hyped up expectations as problems with the facial recognition feature and delayed ship dates were found to be upsetting.

In the ETF equity arena, we saw SmallCaps (SCHA) take the lead with a gain of +0.67%, with Transportations (IYT) taking a close second by adding +0.61%. Emerging Markets (SCHE) and Aerospace & Defense (ITA) showed the only red numbers, namely –0.07% and -0.21% respectively.

The dead cat bounce in Treasury yields continued with the 10-year rising 3 basis points to 2.17%. That took the bullish steam out of the 20-year bond price (TLT), which sank -0.53%. The US dollar index (UUP) traded in a tight range and gave back a modest -0.04% joined by gold, which retreated -0.22% to close at $1,333.

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Hurricane Irma Strikes…Markets Rally

Ulli Market Commentary Contact

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

Sure, why not? After hurricane Harvey’s strike in Texas, which is still trying to get a handle on the amount of devastation and costs to rebuild, Irma struck Florida this weekend wreaking havoc in many parts, but the hit turned out to be less forceful than expected. That fact, combined with N. Korea failing to conduct another missile test, was the enough to send stocks sharply higher with the Dow notching its biggest gain in 6 months.

It did not matter that some 6 million people are without power, and the damage caused may end up being the worst disaster in American history, equities soared, and the major indexes all scored in excess of 1% and never looked back after a huge opening gap.

Leading the charge among our most widely held ETFs were Semiconductors (SMH) with +1.82% followed by Aerospace & Defense (ITA) and Emerging Markets (SCHE) gaining +1.15% and 1.14% respectively. All others closed in the green as well with the laggard being International SmallCaps (SCHC) adding only +0.32%.

Interest rates rose, bucking their 2-month downtrend with the 10-year bond yield gaining 8 basis points to close at 2.14%. As a result, the 20-year bond gave back some of its recent profits by losing -1.19%. The US Dollar index (UUP) bounced for a change and recovered +0.68%. With “risk” being on, at least for the day, and all worries being shoved aside, gold retreated at the tune of -1.15%.

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One Man’s Opinion: The World Is Becoming Desperate About Deflation

Ulli Market Review Contact

By Vitaliy Katsenelson

The Great Recession may be over, but eight years later we can still see the deep scars and unhealed wounds it left on the global economy.

In an attempt to prevent an unpleasant revisit to the Stone Age, global governments have bailed out banks and the private sector. These bailouts and subsequent stimuli swelled global government debt, which jumped 75%, to $58 trillion in 2014 from $33 trillion in 2007. (These numbers, from McKinsey & Co., are the latest, but it’s fair to say they have not shrunk since.)

There’s a lot about today’s environment that doesn’t fit neatly into economic theory. Ballooning government debt should have brought higher — much higher — interest rates. But central banks bought the bonds of their respective governments and corporations, driving interest rates down to the point at which a quarter of global government debt now “pays” negative interest.

The concept of positive interest rates is straightforward. You take your savings, which you amass by forgoing current consumption — not buying a newer car or making fewer trips to fancy restaurants — and lend it to someone. In exchange for your sacrifice, you receive interest payments.

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ETFs On The Cutline – Updated Through 09/08/2017

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 277 (last week 284) 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 8, 2017

Ulli ETF Tracker Contact

ETF Tracker StatSheet

https://theetfbully.com/2017/09/weekly-statsheet-etf-tracker-newsletter-updated-09072017/

A SLIPPERY WEEK

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

Last week’s upward momentum slowed, and the major indexes limped lower, although by a modest amount with the S&P 500 surrendering -0.65%. All eyes were on hurricane Irma, which threatens to make landfall in Florida sometime this weekend, and it is considered to be a “life-threatening situation.” Not helping matters was rumbling about cancelling the debt ceiling altogether and more news about “evil” N. Korean intentions.

For equity ETFs it was a mixed day, as the Nasdaq pulled back the most causing Semiconductors (SMH) to lose -1.08%. Emerging Markets (SCHE) occupied second place with -0.59%. Ending up in the green, not just for the day but also for the week, were Transportations (IYT) with +0.40% and MidCaps (SCHM) with +0.25%. Most others hovered around their respective unchanged lines by small percentages either above or below it.

Financials (XLF) were the loser of the week with a break to the downside of their widely followed moving averages (50-day, 100-day and 200-day). The VIX rose on a weekly basis for the first time in a month but was bound to a very narrow trading range.

Interest rates continued their southerly path for the week, but the 10-year yield bounced 1 basis point today to close at 2.06%. It sure looks like the 2% level might be taken out fairly quickly, which is quite a reversal from the highs of 2.60% last December when the Trump bump had shifted into high gear.

And then there is the US Dollar index (UUP), which continued its race to the downside matching the price from December 2014. YTD, it has lost an astonishing -11.6%.

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