Ulli... The ETF Bully

Weekly StatSheet For The ETF Tracker Newsletter – Updated Through 08/10/2017

Ulli Thursday, 10 August 2017, 6:33 PM ETF StatSheet Contact

ETF Data updated through Thursday, August 10, 2017

Methodology/Use of this StatSheet:

From the universe of over 1,800 ETFs, I have selected only those with a trading volume of over $5 million per day (HV ETFs), so that liquidity and a small bid/ask spread are assured.
Trend Tracking Indexes (TTIs)

Buy or Sell decisions for Domestic and International ETFs (section 1 and 2), are made based on the respective TTI and its position either above or below its long-term M/A (Moving Average). A crossing of the trend line from below accompanied by some staying power above constitutes a “Buy” signal. Conversely, a clear break below the line constitutes a “Sell” signal. Additionally, I use a 7.5% trailing stop loss on all positions in these categories to control downside risk.

All other investment arenas do not have a TTI and should be traded based on the position of the individual ETF relative to its own respective trend line (%M/A). That’s why those signals are referred to as a “Selective Buy.” In other words, if an ETF crosses its own trendline to the upside, a “Buy” signal is generated. Since these areas tend to be more volatile, I recommend a wider trailing sell stop of 7.5% -10% depending on your risk tolerance.

If you are unfamiliar with some of the terminology, please see Glossary of Terms and new subscriber information in section 9.

DOMESTIC EQUITY ETFs: BUY — since 4/4/2016

Click on chart to enlarge

Our main directional indicator, the Domestic Trend Tracking Index (TTI-green line in the above chart) is positioned above its long-term trend line (red) by +2.38% after having generated a new Domestic Buy signal effective 4/4/2016 as posted.

N. Korea: Simmering Tensions Punish Equities

Ulli Thursday, 10 August 2017, 4:08 PM Market Commentary Contact

[Chart courtesy of MarketWatch.com]

Moving the Markets

The war drums with N. Korea were beating louder today as the high octane rhetoric was turned up a notch with a “preemptive strike” headline and similar dialogues pulling stocks down for the 3^rd consecutive day. The session ended with the major indexes at their lows, which will make for an interesting opening tomorrow. If you find the news confusing, you might want to read a right-to-the-point article from the Ron Paul Institute here.

ZH summed the day up best:

Nasdaq, Dow, S&P, Small Caps worst day in 3 months (to one month lows)
S&P Tech Sector worst day in 2 months
Financials worst day in 3 months
HYG (HY Bond) worst 3-day move in 5 months (to lowest since March)
VIX biggest 3-day spike since Aug 2015 China devaluation
Gold’s best 3-day rally in 3 months
Yuan biggest 3-day gain in 2 months

Of course, should this war mongering talk end up being a nothing burger, we could see a gigantic rally back towards record territory, but it’s too early to tell. For the time being, volatility shot up with the S&P VIX banging through its 200 day M/A and closing at 16, which is quite a jump from its recent low of around 8 and is its highest price since the election.

To no surprise, gold had another good day and surged to a 2-month high. This level of uncertainly had Wall Street traders move into bonds causing interest rates to drop thereby allowing the 20-year bond TLT to rally +0.85%. The US Dollar (UUP) held up fairly well and gave back only a modest -0.17%. Please see section 3 below as to the affect on our Trend Tracking Indexes (TTIs).

Dow Slips For 2nd Straight Day

Ulli Wednesday, 9 August 2017, 3:26 PM Market Commentary Contact

[Chart courtesy of MarketWatch.com]

Moving the Markets

Yesterday’s slippage continued early this morning, but dip buyers stepped in encouraged by a NT Times story alleging that Trump’s ‘Fire and Fury’ words were his own and not US policy. During the last hour, the whipping boy of the year, AKA the VIX, was spanked again and while helping the indexes recover, they fell short of the intended goal, namely to cross back above the unchanged line.

With geopolitical uncertainty in full swing, it was no surprise to see gold rally solidly by adding +1.53%. In regards to equity ETFs, we saw mainly red numbers with SmallCaps (SCHA) surrendering -0.75%, closely followed by MidCaps (SCHM) with -0.53%. Even the Emerging Markets (SCHE) were unable to mount a rally and gave back -0.82%. Eking out a tiny gain were Dividend ETFs (SCHD) with +0.04%; Transportations (IYT) closed unchanged.

While FANG stocks continued their journey south, Apple scored a new record high and gained +0.61%. The VIX headed north again and broke above the 12 level, and above its 200-day M/A, which is quite a change from its recent all-time low just below 9. If this trend is sustained, equities will eventually be negatively affected. Bonds were the beneficiary of this uncertainty as yields dropped and the 30-year bond rallied to add +0.55%. The US dollar (UUP) was fairly docile, traded sideways and closed down -0.08%.

Trump’s ‘Fire And Fury’ Speech Takes Starch Out Of Upward Momentum

Ulli Tuesday, 8 August 2017, 3:33 PM Market Commentary Contact

[Chart courtesy of MarketWatch.com]

Moving the Markets

The major indexes did their customary morning dip and then started to recover to cross solidly above their respective unchanged lines. Hedge fund heavyweight Jeff Gundlach’s market warnings were offset somewhat by the usual VIX beating to keep the Dow winning streak alive. However, Trump’s “Fire and Fury” speech directed towards North Korea took the starch out of upward momentum and south we went, as the chart above shows.

Winning big time, prior to Trump’s speech, were the Seminconductors (SMH) with +2.75%, a gain that disappeared in a hurry and turned into a -0.30% loss, pretty much in line with the percentages the broader indexes gave back. Volatility showed signs of life with the VIX storming out of the basement to close above 11. That caused the FANG stocks to take a dive, and they gave back yesterday’s gains.

Gold was able to buck the trend by closing in the green, as did the Emerging Markets (SCHE) with +0.19%. Interest rates rose with the 10-year yield adding 3 basis points to close at 2.29%. Yes, with rising geopolitical tensions, you might have expected rates to fall, but they didn’t. The US Dollar (UUP) bounced around, traded in a wide range and settled +0.17% higher.

Lowest Volume Since 2001; Dow Ekes Out A Record Close

Ulli Monday, 7 August 2017, 3:33 PM Market Commentary Contact

[Chart courtesy of MarketWatch.com]

Moving the Markets

The Dow continued with its 9^th record close in a row, which is its longest streak since February. The S&P and Nasdaq ended the day higher as well with the Nasdaq leading the pack with +0.51%. However, it was Semiconductors (SMH), part of the 10 ETFs in the Spotlight, which took top billing with its chest pounding performance of +1.76%.

Helping matters again was the VIX, which got pounded back below 10 in order to assure a “green” closing of the S&P 500. SmallCaps (SCHA) were held in check but added +0.16%, while the Emerging Funds (SCHE) danced to the tune of their own drummer with a solid gain of +0.64%.

Interest rates were fairly docile and traded in a tight range with the 10-year yield dropping 1 basis point to 2.26%. The US Dollar (UUP) slipped, rallied and pulled back but ended up losing only a scant -0.04%. Gold followed a similar pattern, found support at its 100-day M/A and closed just about unchanged.

One Man’s Opinion: The Death Cross Of Central Bank Credibility

Ulli Sunday, 6 August 2017, 5:45 AM Market Review Contact

By ZeroHedge

With no expectations of a rate-hike last week, and traders rapidly giving up on The Fed’s dream of a steadily higher rate trajectory, a funny thing happened in the markets…

In the eyes of The Fed, their monetary policy has not been this ‘tight’ since October 2008.

However, in the eyes of the market, financial conditions just hit their easiest level in history (easier than the September 2005 previous record easiness level).