Ulli... The ETF Bully

Dollar And Financials Head South; Equities Recover

Ulli Monday, 27 March 2017, 3:28 PM Market Commentary Contact

[Chart courtesy of MarketWatch.com]

Moving the Markets

Equities looked to be on a slippery slope this morning with all indexes starting the day being underwater by about -1%. For a change, dip buyers stepped in and off to the races we went recouping almost all losses at the close. However, the Dow now has notched its 8^th down day in a row, its longest losing streak since 2011. If it hits 9 tomorrow, that would be the worst spell since 1978.

Banks got clobbered again but managed to recoup some of the losses. Goldman Sachs has been on the skids 14 of the last 16 days, its worst drop since January 2016. That also means that banks have dipped into the red for the year, which not exactly a sign of confidence. Hat tip goes to ZH for these stats.

The leader continues to be the tech sector confirmed by our SMH ETF in the daily “Spotlight listings,” which has been holding on to the #1 spot for some time (see section 2 below). Energy as a whole has been lagging as oil continues on its slippery path south ending the day below $48/barrel.

The dollar dropped again and lost -0.47% for the day despite the Fed’s recent hike in interest rates. It has now erased about 80% of its post-Trump gains meaning that the “reflation theme” based on Trump’s economic projections may not play out as planned, at least not for the time being. Precious metals have been the winner of the dollar’s collapse.

One Man’s Opinion: David Stockman Offers “More Proof Of Janet Yellen’s Idiocy”

Ulli Sunday, 26 March 2017, 5:55 AM Market Review Contact

Authored by David Stockman via The Daily Reckoning,

During the last 129 months, the Fed has held 86 meetings. On 83 of those occasions it either cut rates or left them unchanged.

So you can perhaps understand why Wednesday’s completely expected (for the last three weeks!) 25 bips left the day traders nonplussed. The Dow rallied over 100 points that day.

Traders understandably believe that this monetary farce can continue indefinitely, and that our Keynesian school marm’s post-meeting presser was evidence that the Fed is still their friend.

No it isn’t!

Janet Yellen’s sing-song gibberish was the equivalent of a monetary DEFCON 1, alerting all except the most addicted Kool-Aid drinkers to get out of the casino.

Our monetary politburo has expanded its balance sheet by a lunatic 22X during the last three decades and in the process has systematically falsified financial asset prices and birthed a mutant debt-fueled of simulacrum of prosperity.

But once it begins to withdraw substantial amounts of cash from the canyons of Wall Street as per its newly reaffirmed “normalization” policy, the whole house of cards is destined to collapse.

ETFs On The Cutline – Updated Through 03/24/2017

Ulli Saturday, 25 March 2017, 6:09 AM 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 221 (last week 224) 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 March 24, 2017

Ulli Friday, 24 March 2017, 3:55 PM ETF Tracker Contact

ETF Tracker StatSheet

https://theetfbully.com/2017/03/weekly-statsheet-etf-tracker-newsletter-updated-03232017/

HEALTH CARE BILL FAILS; MARKETS SINK

[Chart courtesy of MarketWatch.com]

Moving the Markets

In a repeat performance of yesterday, an early rally stalled and reversed leaving the major indexes about unchanged for the day but down for the week with the S&P 500 surrendering some -1.4%.

As I mentioned throughout the week, the most widely watched news event was the path of the health care bill and whether Trump could muster enough votes in his own party to get the legislation through congress. The answer was finally revealed, before the markets closed, as Republicans pulled the bill prior to the voting procedure admitting that it could not get passed in its present form.

That leaves the question as to what market reaction might be come next week. On view is that this is an ominous sign for Trump’s ability to push through his economic agenda while, on the other hand, you could argue that, with this monkey off his back for the time being, other things that are not as complicated like lowering taxes and reducing regulations, might be more doable.

Market internals looked like this: This is the Dow’s longest losing streak (7 days) since election. Small Caps had their worst week since February 2016. The S&P 500 had its worst five trading days since November while the Financials suffered their worst week since January 2016.

The greenback continued its slide for the 8^th losing day in a row, which is the longest losing streak for the Bloomberg Dollar Index since April 2011. Treasury yields dropped on the week, despite the Fed’s rate hike on 3/15, which gave bond investors a reason to cheer as bonds finally rallied. Gold was the winner again, and the precious metal is now up for 2 weeks in a row, its best 2-week period since Brexit in 2016.

Weekly StatSheet For The ETF Tracker Newsletter – Updated Through 03/23/2017

Ulli Thursday, 23 March 2017, 6:30 PM ETF StatSheet Contact

ETF Data updated through Thursday, March 23, 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 +2.31% after having generated a new Domestic Buy signal effective 4/4/2016 as posted.

Hope Rally Fails As Health-Care Bill Vote Is Delayed

Ulli Thursday, 23 March 2017, 3:32 PM Market Commentary Contact

[Chart courtesy of MarketWatch.com]

Moving the Markets

One look at the above chart shows the type of roller coaster ride the major indexes went through resulting from continued uncertainty about the outcome of the health care vote. In the end, hope of a passage got crushed as the vote got postponed on doubts that it can pass handing Trump a defeat, as his own party appeared to be split on the battle to repeal and replace “Obamacare.” The vote is now tentatively planned for Friday.

The major indexes gave back early gains and ended up slightly in the red, which was the Dow’s sixths straight day of losses. How wild was the ride? ZH summed it up nicely: