Upcoming Healthcare Vote Keeps Markets In Check

Ulli Market Commentary Contact

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

Since market participants did not show much commitment one way or the other, the major indexes ended up hovering slightly above and below the unchanged line but managed to close slightly above it except for the Dow, which gave back a tiny -0.03%. Considering yesterday’s sharp selloff, today’s lack of follow through to the downside was an encouraging sign for the bulls in that there may be more upside potential ahead.

The choppiness and uneasiness was caused by uncertainty not only about Trump’s struggle to push through his healthcare bill, with a vote looming on Thursday, but also his ability to successfully promote his promised tax cuts, which were the main cause of the record breaking rally since November.

Interest rates continued their march south as the 10-year US Treasury yield dropped from a recent high of 2.62% to 2.40% meaning that bonds went back into rally mode during the past 1.5 weeks. The dollar slipped again following the recent downward trend, which started in early March, thereby helping gold to score its 5th day of gains in a row and closing above $1,250.

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Banks & Stocks Bleed While Gold Shines

Ulli Market Commentary Contact

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

An early rally attempt driven by Apple reaching new all-time highs was rebuffed in a hurry, as worries surfaced that Trump may not be able to deliver on his promised tax cuts as quickly as had been assumed, an assumption that has been the reckless driver of the market in recent months.

Right now, it appears that nervousness is increasing ahead of the crucial vote on Thursday regarding the new healthcare plan. Depending on the news source, it’s become more questionable today as to whether Trump can muster enough votes to push the new legislation through. If he fails, his much hailed tax cuts may have to be put on the back burner and may not come to fruition until next year.

With Wall Street having more or less counted on tax cuts and the infrastructure plan, any disappointment will impact market direction, the beginning of which we may have witnessed today. The major indexes had their first 1% plus drop since October 11, as the D.C. drama intensified.

Not helping matters was the continued demise of the US currency with the dollar index dropping back below the widely watched 100 level and to near election lows. Bank stocks (JPM, GS, MS, BAC) got clobbered again and had their worst day since Brexit. The winner again was precious metals, which continued on their recent upward path. Is there more downside to come? The following graph attempts to shed some light on that question:

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Equities Lower; Precious Metals Higher

Ulli Market Commentary Contact

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

An early rebound attempt ran out of steam as the Fed paraded a couple of their mouthpieces, who managed to spew some words of hawkishness to undermine any positive market momentum. First it was Fed’s Harker, who caused some worries with announcing that we “can’t rule out more than 3 hikes this year,” which was followed by Fed’s Evans with “more upside possibility in uncertainty facing Fed,” and then this bon mot:

“This is a challenging time period to all of a sudden have a big injection of positive fiscal policy expansion because we are pretty close to full employment. We might be at full employment.”

To me, that sounded like if Trump even attempts any fiscal boost, like infrastructure spending, it may very well be met with additional rate hikes, which is not exactly soothing for the nervous crowd on Wall Street.

In the end, the pullback was minor as the major indexes recovered thanks to the usual last hour ramp thereby keeping any losses to a minimum. Retail stocks continued to get clobbered; High Yield bonds slipped again, as did the 10-year Treasuries but gold managed to hold on to its March gains.

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One Man’s Opinion: Beware The Ides Of March

Ulli Market Review Contact

By Jeff Thomas

Eidus Martiae is the Latin term for 15th March, from the traditional Roman calendar. Since 44 BC, the Ides of March has held a dark reputation, as that was coincidentally the date of the assassination of Julius Caesar.

In December of 2016, the Chairman of the Federal Reserve announced that the Fed was likely to raise the interest rate several times in 2017. The next such rise is anticipated to take place on 15 th March.

This is also an interesting date, as it’s the date upon which the US government reaches its debt ceiling. This was cast in stone by the previous administration, back in 2015. Although they put into place an automatic freeze on any increase in debt after that date, they did nothing to either cut back on expenditure or prepare for further funding. Therefore, the Ides of March once again has become ominous, as the US government is set to come to a grinding halt as soon as the money presently in the Treasury runs out.

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ETFs On The Cutline – Updated Through 03/17/2017

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 224 (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.

ETF Tracker Newsletter For March 17, 2017

Ulli ETF Tracker Contact

ETF Tracker StatSheet

https://theetfbully.com/2017/03/weekly-statsheet-etf-tracker-newsletter-updated-03162017/

EQUITIES DIP AND DOLLAR PLUNGES

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

Stocks dipped slightly today but managed to squeeze out a gain for the week with the S&P 500 adding 5 points or 0.2%, which is not a particularly noteworthy performance but, given the uncertainty in Europe along with the Fed’s move on interest rates, we could have ended up far worse.

The US dollar, on the other hand, was not as fortunate and got clobbered resulting in its worst week in some 8 months. It is now down over 3% for this quarter. The yield on the benchmark 10-year Treasury came off its 30-month high of 2.62% and ended down 2.53%, causing a rebound in the bond market. That helped HYG (high yield bond ETF) to recover a bit and bounce of its major support trend line.

Financials had their 2nd worst week of the year while gold remained on its recent bullish path. Today was quadruple option expiration day, which results in higher than normal volume but also tends to distort price levels. With this now behind us, I am curious to see if other main issues such the debt ceiling debate, which certainly will affect market direction, will finally be addressed in the coming weeks.

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