Afternoon Rally Starts June With A Bang

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

Private sector hiring as reported by ADP, which added a seasonally adjusted and bigger–than-expected 253k rise in employment for May, set the tone for the market, as the major indexes climbed steadily above the unchanged line and into record territory.

As has been the case in the recent past, negative news like US construction spending plunging in April by -1.4%, worse than the weakest expectations, along with a drop in US manufacturing to 8-month lows, were ignored as euphoria about a potentially strong jobs report due out tomorrow took center stage.

All three major indexes gained solidly and even SmallCaps, which have been lagging recently, managed to rebound and gained +1.76% on the day, which was their best day since the election. MidCaps joined the party by gaining +1.39%. Also, the trailing Dow finally hit a new record for the first time since March 1st.

Financials recovered from the recent bloodbath with the Regional Banking Index (KRE) recovering +1.78% from its recent losses. YTD, only 2 of the major banks are showing green numbers (BAC, MS), while JPM and GS are stuck below the unchanged line led by GS with a loss of -9.67%. Interest rates were steady, and the US Dollar (UUP) managed to eke out a tiny gain of +0.12%.

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Closing Out May On A Weak Note

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

For the second day in a row, the major indexes limped slightly lower but ended up closing the out the month on the plus side. The Nasdaq took the lead with +2.5%, followed by the S&P 500 with +1.2%, while the Dow desperately hung on to the unchanged line but conquering it by a scant +0.3%.

The economic hits kept coming even though I don’t particularly look for them. Financials headed south, because two of the largest banks (JPM, BofA) signaling a trading slow down, warning  that revenue will be down as much as 15%, pushing them into the red YTD. Macro data collapsed for the second month in a row, the biggest sequential drop in US economic conditions since May 2011, according to ZH.

Pending home sales in April hit the skids and tumbled 5.4% YoY, which is their biggest drop since the middle of 2014. Crude Oil tanked again and appears to be firmly stuck below the $50 level. Interest rates slipped with the 10-year T-Bond (TLT) gaining +0.25%. The US Dollar (UUP) headed lower losing -0.24% today but gave back -2.1% for May; it’s down YTD by -5.3%.

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Going Nowhere Fast

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

The markets seemed to have a hangover after the 3-day weekend with the major averages remaining stuck below the unchanged line giving back  some of last week’s gains.

Macro data continues to head south as consumer confidence dropped to its weakest since February confirming that hope has faded as evidenced by plans to buy homes, cars and major appliances, which hit their lowest level of the year.

No helping the mood on Wall Street are, and have been, appearances by banks and heavyweight money managers warning that Fed re-normalization could send equities 30% lower with BofA being the latest. Then famous hedge fund guru Paul Singer opined this morning that “All Hell Will Break loose” by issuing this:

Given group think and the determination of policy makers to do ‘whatever it takes’ to prevent the next market ‘crash,’ we think that the low-volatility levitation magic act of stocks and bonds will exist until the disenchanting moment when it does not. And then all hell will break loose (don’t ask us what hell looks like…), a lamentable scenario that will nevertheless present opportunities that are likely to be both extraordinary and ephemeral. The only way to take advantage of those opportunities is to have ready access to capital.

Surely, none of this helped the markets, and it appears that after the recent gains, which wiped out May’s mid-month losses, we will silently fade into the last day of May tomorrow.

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One Man’s Opinion: Legendary Investor Asher Edelman Says “I Have No Doubt” PPT Behind Market Rally

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By ZeroHedge

Legendary vulture investor Asher Edelman, the 1980s model for Gordon Gekko, strayed into what must’ve been uncomfortable territory for CNBC during an appearance on “Smart Money” when he discussed his view that the government’s “plunge protection team” is the only thing propping up the current market rally, and said he suspects that it has again been recently een intervening in the market to keep stocks at record highs.

Edelman simply notes that he doesn’t want to be in the markets right now because “I don’t know when the plug is going to be pulled.”

Few can explain the market’s recent resilience, holding near record highs despite weak economic data and intensifying geopolitical tensions. The main benchmarks have risen for the fourth straight day following last week’s “Trump Dump” despite a terror attack in the U.K., the worst soft economic data since February 2016, and surprisingly low trading volume.

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ETFs On The Cutline – Updated Through 05/26/2017

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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 273 (last week 264) 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 26, 2017

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ETF Tracker StatSheet

https://theetfbully.com/2017/05/weekly-statsheet-etf-tracker-newsletter-updated-05252017/

PUSHING HIGHER

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

Despite treading water all day, the S&P 500 and Nasdaq managed to crawl slightly above the unchanged line, thanks to a last minute levitation, thereby closing at another all-time high. Today’s assist came from a rise in consumer discretionary stocks like Best Buy (BBY), which pulled back a little today after adding +21.5% on Thursday.  Even oil showed some signs of life after yesterday’s drubbing by gaining +1.80%.

Today’s gains, although tiny, had nothing to do with improving fundamentals, which still leave a lot to be desired of, to say it mildly. Case in point is the US Macro data index, which now has fallen to 15-month lows, as well as the Nasdaq Composite, the Earnings Expectations of which have slumped to 2017 lows; but, none of these data points matter, until one day when they do.

CitiBank came out forecasting that a close today above 2,405 on the S&P 500 suggests we can rally towards 2,500+ in the coming weeks. While that is a positive prediction, I prefer not to guess but to use my Domestic Trend Tracking Index (TTI) for directional guidance. The TTI is currently deeply entrenched on the bullish side (see section 3), and we will follow its trend until it either ends or our trailing sell stop points give the signal to exit.

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