One Promise Drives Major Indexes To Record Highs

Ulli Market Commentary Contact

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

The stagnated rally of the past few days, during which Wall Street was looking for more details about Trump’s agenda, was revived today when he stepped up to the plate and said that “he would make a major tax announcement in a few weeks.” He also added that “lowering the overall tax burden on American business is big league” without giving any further indication as to what this might entail.

That’s all it took, and the major indexes scored a triple with all three of them gaining over +0.5% for the session. Financials performed the best by gaining +1.4% and were closely followed by energy with +0.9%, while the conservative utilities sector gave back -0.8%.

Trump’s announcement overrode even poor earnings news from Twitter (-12.3%), Intel (-2.5%) and Coca Cola (-1.8%). Bonds sold off as interest rates rose with the US-10 year yield gaining 6 basis points to 2.40%, as the 30-year bond yield spiked back above the 3% level to end at 3.02%.

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Eking Out A Small Gain

Ulli Market Commentary Contact

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

Mixed earnings and slipping bank stocks put a damper on the major indexes, which started the session below the unchanged line. This would normally be the time in the quarter where earnings are front and center, but not this time; the rally has stagnated recently, as Wall Street prefers to look for more details about Trump’s economic agenda.

Still, we continue to hover around record highs with any pullbacks being limited via Fed intervention. For today, banks slipped as bond yields got hammered, losing 6 basis points, or 2.5% causing TLT to rally at the tune of +1.36%.

The dollar dropped but gold was the savior and rallied +0.53%, which is its 8th day of gains out of nine. Here’s another dubious record: The S&P 500 has now traded for 37 days in a row without a 1% intra-day move and 81 days in a row without a 1% drop. If that is not market manipulation, I don’t know what is.

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Hawkish Comment Equals Uncertainty

Ulli Market Commentary Contact

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

An early euphoric bounce, which pushed the Dow and Nasdaq to new intra-day highs faded and then took a nose-dive below the unchanged line before recovering slightly into the close. The morning strength was caused by the US dollar rallying sharply as hawkish comments from one of the Fed’s mouthpieces indicated that “March was live” and three rate hikes were still on the table.

I am not sure how much of that was empty jawboning but the dollar rally reversed later on leaving the gain at a more modest +0.50%. Treasury bonds rallied with TLT gaining +0.74% for the day. Adding to the confusion are the upcoming (March) debt ceiling talks, the outcome of which will for sure have an impact on just about all asset classes.

The weakling of the day was Crude Oil, which not only lost -1.40% but also broke below its 50 DMA (Daily Moving Average) which, after having served as a springboard for weeks, has now become a ceiling and could spell more weakness for the sector. On the other end of the spectrum was gold, which broke above its 100 DMA by gaining another +0.28% and has now risen 7 out of the last 8 days.

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Slipping And Dippping

Ulli Market Commentary Contact

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

All of today’s activity happened below the unchanged line with the energy sector dropping (-0.9%) as oil prices slipped and gave back -1.37%. Of course, after Friday’s climb into record territory, a pause was in order with Wall Street awaiting the next run of earnings reports along with more clarity on Trump’s policies.

On the other hand, the post election run has been nothing but euphoric, and there has to be some realization that, despite all good intentions, Trump simply can’t get everything resolved within the first 100 days. I expect this realization, along with concerns about the backlash against protectionist policies from Washington and around the world, to cause more uncertainty in the market place.

Nine of the 11 major S&P sectors closed down along with Treasury yields while the US dollar pumped and dumped only to end the session unchanged. The winner of the day and for the year so far, was gold, which added +1.34%.

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One Man’s Opinion: How Much Longer Can The Market Go Without A Correction?

Ulli Market Review Contact

By Zero Hedge

With the recent performance of the S&P, in which there has not been even a single 1% drawdown since the election, not only is complacency raging but some traders have forgotten what it even means to experience a modest 5% correction, let alone a 20% bear market. How much longer can this go on?

For the answer, we turned to a recent report by InvesTech, according to which as the table below shows, a 5% correction has occurred about once every seven months in an ongoing bull market.

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ETFs On The Cutline – Updated Through 02/03/2017

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 228 (last week 217) 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.