Dow Ekes Out A Record; S&P And Nasdaq Slip

Ulli Market Commentary Contact

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

Weighing on the major indexes was a sell-off in predominantly three sectors, which kept a lid on the usual afternoon ramp. Retail (XRT), Financials (XLF) and SmallCaps (SCHA) combined their poor performances of -2.35%, -1.38% and -1.10% respectively to keep any upward momentum from gaining speed—and they succeeded with only the Dow eking out a tiny gain to again sneak into record territory.

Again, tax talk was on the table, and anxiety prevailed as to whether, how and when some policy might be enacted. For sure, equities will be vulnerable should a tax bill have trouble passing. Given how far stocks have risen on account of a potential major tax reform, today’s retreat is hardly worth mentioning.

In ETF space, green numbers were hard to find with the Dividend ETF (SCHD) being the exception with a gain of +0.25%. All of our other holdings slipped led by Financials (XLF) with -1.38% and followed by SmallCaps (SCHA) with -1.10% and Transportations (IYT) with -0.69%.

Interest rates were mixed with the 10-year bond yield remaining unchanged, but the price of the 20-year bond (TLT) rallied +0.42%. High yield bonds (HYG) slipped in price -0.28% and at the same time dropped below their 50-day M/A. High yield bonds can at times be the canary in the coal mine by pointing to the future direction of interest rates, which may give a clue as to where equities might be headed. That’s important because if high yield bonds collapse, interest rates will rise and equities may head south.

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More All-Time Highs

Ulli Market Commentary Contact

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

The weekend news simply did not matter. Saudi Arabia went into crisis mode after 2 of their princes died, one via a helicopter crash and the other one in a firefight to avoid arrest, dozens were taken into custody, assets were frozen and a no-fly zone for private planes was invoked. Domestically, McCain called the new tax deal DOA and—the major indexes rallied to new highs, which marked the 26th time this year that simultaneous records have been set.

At least one asset class reacted as it should, namely gold, which added over 1%. Maybe that’s a reflection that some traders finally reached out for a safe haven asset. Of course, as was to be expected, turmoil on the Middle East always affects crude oil, and today was no exception as the black gold rallied over 3%.

In ETF space, Semiconductors (SMH) kept the bullish momentum going by jumping +1.29% with Emerging Markets (SCHE) having a great showing as well with a gain of +1.05%. On the downside, we saw the Dividend ETF (SCHD) and Transportations (IYT) surrender -0.31% and -0.26% respectively.

Interest rates dropped as the yield on the 10-year bond gave back 2 basis points to end the session at 2.32%. That is only 1 point above its 200-day M/A which, if clearly broken to the downside, could mean lower rates ahead. The US Dollar (UUP) tumbled today by -0.24% erasing its recent gains.

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One Man’s Opinion: The US Government Quietly Added $200+ Billion To The Debt This Month Alone.

Ulli Market Review Contact

By Simon Black

There’s been something happening this month that very few people have noticed.

It’s been lost beneath all the other headline-dominating news, from the Las Vegas shooting to Harvey Weinstein to the Mueller investigation.

But very quietly behind the scenes there’s been an extremely rapid uptick in the US national debt.

In the month of October alone, the US national debt has soared by nearly a quarter of a trillion dollars.

This is pretty astonishing given that October is supposed to be a ‘good’ month for the US Treasury Department. The tax extension deadline means that October is usually quite strong for federal tax receipts.

And it has been– taxpayers have written checks totaling $190 billion to Uncle Sam so far this month.
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ETFs On The Cutline – Updated Through 11/03/2017

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 262 (last week 248) 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 November 3, 2017

Ulli ETF Tracker Contact

ETF Tracker StatSheet

https://theetfbully.com/2017/11/weekly-statsheet-etf-tracker-newsletter-updated-11022017/

DOW AND S&P 500 SCORE 8TH STRAIGHT WEEKLY GAIN

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

And the beat goes on. After a weak opening, the major indexes found some footing and continued their ascent into record territory. The rise was modest with an assist coming from Apple (AAPL) due to their strong report card, which was good enough to offset mixed economic data points including a mediocre October jobs report. Payrolls grew by 261k last month vs. expectations of 325k. The unemployment rate slipped from 4.2% to 4.1% despite news that 968k exited the labor force pushing the total number of people not in the labor force to 95.385 million—and that was supposed to have led to a lower employment rate? Go figure…

Giving the markets a big assist was the crushing of the VIX to 8.99 intra-day and to a record weekly closing low of 9.03. That helped the mid-day rebound, as we have become accustomed to throughout this year.

As a result, most of our ETF holdings gained, but there were some losers as well. Leading to the upside were Semiconductors (SMH) with +1.10% followed by LargeCaps (SCHX) with +0.31%. On the downside, we saw Aerospace & Defense (ITA) pulling back -0.67% after its huge gain yesterday, while the Emerging Markets (SCHE) surrendered -0.51%.

Interest rates dropped with the 10-year bond giving back 1 basis point to end the week at 2.34%. Crude oil gained and has now crawled back above its $55 level. After whip-sawing all week, the US Dollar (UUP) rebounded to end the past 5 trading days just about unchanged.

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Weekly StatSheet For The ETF Tracker Newsletter – Updated Through 11/02/2017

Ulli ETF StatSheet Contact

ETF Data updated through Thursday, November 2, 2017

Methodology/Use of this StatSheet:

  1. 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.
  2. 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.

  1. 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.

                           

  1. 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 +3.22% after having generated a new Domestic Buy signal effective 4/4/2016 as posted.

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