Tax-Revamp Boost Runs Out Of Steam

Ulli Market Commentary Contact

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

The major indexes slipped a bit as the much touted and hyped tax deal appeared to be done, and the legislation was finally sent to President Trump for his signature. It seems that the bill’s passage left investors emotionally exhausted and apathetic as the actual news was a non-event in terms of market direction.

Despite an early bounce, the indexes spent the day hovering slightly above and below their respective unchanged lines, which was reflected in a mixed performance in the ETF space. Leading to the upside were Transportations (IYT +0.94%), Semiconductors (SMH +0.65%) and International SmallCaps (SCHC +0.28%). Giving back some of their recent gains were the Financials (XLF -0.18%) and International Equities (SCHF -0.06%).

Interest rates continued to surge with the 10-year bond yield adding another 3 basis points to 2.49%, its highest level since last March. That rise resulted in another spanking for the 30-year bond (TLT), which gapped down for the second day in a row (-1.11%) to a 4-week low. The US dollar (UUP) followed suit by losing -0.12% and remaining below its 50-day M/A.

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Falling Off The Highs

Ulli Market Commentary Contact

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

The major indexes slipped today as all eyes remained firmly focused on the tax package, which originally was supposed to be signed by President Trump today. However, after the markets closed, the process “hit a procedural snag” forcing another vote on Wednesday. Whether that will finally cinch the deal is everyone’s guess.

Equities headed south, after a short-lived early bounce, and the ETF space was no exception, as we gave back some of the gains of the last couple of days. Showing the only green number was the Dividend ETF (SCHD) with +0.06%. Surrendering the most were SmallCaps (SCHA) with -0.66% followed by Financials (XLF -0.43%) and Aerospace & Defense (ITA -0.41%).

Yesterday’s interest rate spike continued with the 10-year yield bouncing sharply higher by adding 7 basis points to 2.46% matching the late October high. As a result, the 20-year bond (TLT) got hammered and lost -1.30%. In summary, it was one of those days were bonds and equities were down simultaneously. The US Dollar (UUP) traded in a wide range but lost only -0.29%.

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Tax Cut Expectations Propel The Major Indexes

Ulli Market Commentary Contact

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

How many times have I referred to the expected tax law changes to be responsible for powering the equity markets? Too many to recall, but it appears to be the gift that keeps on giving. Today was no different, as the major indexes ended solidly in the green.

ZH summed the record run up as follows:

The Dow closed at its 70th record of the year… it has never done that before in its 100-year-plus history. Additionally, the S&P 500 is most overbought (weekly RSI) since 1958. There have been no down months since Trump was elected, and 2017 is shaping up to be a ‘Perfect Year.’ This would be the first time ever that stocks had 12 monthly gains in a row in a calendar year…

In ETF space we saw nothing but green numbers and solid gains across the board. Leading the pack was our YTD favorite, namely Semiconductors (SMH), with +1.76%. That was followed by SmallCaps (SCHA +1.35%), Transportations (IYT +1.29%) and MidCaps (SCHM +0.94%). Low man on the totem pole was Aerospace & Defense with +0.30%.

Interest rates headed higher with the yield on the 10-year bond adding 4 basis points to 2.39%. That did not help the 20-year bond price (TLT), which slipped -0.91%. Crude Oil was just about unchanged, but Gold managed to follow through on its recent rebound. The US Dollar (UUP) took a steep dive early on but managed to cut its losses to a modest -0.25%.

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One Man’s Opinion: Is it Tuesday? Time for another Banking scandal

Ulli Market Review Contact

By Simon Black

Another day, another major banking scandal. It’s getting to the point where you can practically set your watch to these things.

The latest involves our old friend Wells Fargo. The Wall Street Journal reported last night that Wells has been screwing its customers on foreign currency exchange rates.

According to the Journal, Wells Fargo conducted an internal review of its fee arrangements and found that they had massively overcharged 88% of the sampled customers.

For example, the bank might have signed a contract with a customer to charge 0.15% on foreign currency transactions, but instead charged as much as 4%… about 26x higher than agreed.

It’s absurd to begin with that a bank would charge even a small percentage-based commission on foreign currency transactions (much less 4%), especially given that most of the transactions were to exchange euros and US dollars.

Sure, commissions are common in many industries.
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ETFs On The Cutline – Updated Through 12/15/2017

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 257 (last week 250) 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 December 15, 2017

Ulli ETF Tracker Contact

ETF Tracker StatSheet

https://theetfbully.com/2017/12/weekly-statsheet-etf-tracker-newsletter-updated-12142017/

 EXTENDING THE WEEKLY GAIN STREAK

 

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

When looking at yesterday’s weakening market action, today can only be described as “opposite” day, as senators Rubio and Corker fell in line and announced a “Yes” vote to the long overdue agreement on Trump’s tax plan, as a last minute expansion of the child tax credit proved to be the solution. While this vote may not be chiseled in stone, it created enough optimism to torpedo the major indexes into record territory—again.

Equities scored some nice gains, and in ETF land we saw mostly green numbers. The only exception was International Equities (SCHF), which slipped -0.09%. On the plus side, we spotted several ETFs with gains above 1%. The number one spot was taken by our standby favorite, namely Semiconductors (SMH) with +1.64%. In close pursuit were Aerospace & Defense (ITA +1.62%), US SmallCaps (SCHA +1.24%) and MidCaps (SCHM +0.84%).

While the 10-year bond remained unchanged, the action was in the longer dated securities with the 20-year rallying +0.38% and honing in on its 2017 high as the yield curve continues to flatten (meaning that long term yields are falling while near term yields are rising). The US dollar (UUP) bounced back from its recent sell off and gained +0.41%.

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