Diving Off The Highs Into The Red But Closing In The Green

Ulli Market Commentary Contact

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

You could say that the much anticipated “big” Thursday turned into a dud as far as the Comey testimony was concerned. While the markets whipsawed throughout the day, in the end, the major indexes closed above the unchanged line. The Dow touched new record territory before dipping into the red after which it reclaimed positive ground.

SmallCaps (IWN) were on fire and gained +1.60%, which was their 2nd biggest day in over 3 months, while the semiconductors (SMH) showed a great performance as well by scoring +1.35%. Financials joined the party and outperformed with XLF adding +1.15% for the day. When there are winners, there must be losers. Today, it was utilities, which had their worst day in 3 months.

Crude oil slipped again and came dangerously close to dropping below the $45 handle. Interest rates rose with the 10-year Treasury bond now yielding +2.18%, a nice bounce off the recent lows. The US dollar climbed higher for the second day in a row with UUP gaining +0.36%, but the longer downtrend remains intact.

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Waiting For A Potentially Market Moving Thursday; Crude Oil Gets Crushed

Ulli Market Commentary Contact

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

MSM was keeping the hype up ahead of this Thursday by using phrases like “market moving” in regards to Comey’s testimony and the UK election. I think the cat is out of the bag, as Comey’s prepared remarks confirmed there is no smoking gun, which the major indexes took as a positive by rallying modestly for most of the afternoon and closing above the unchanged line.

The surprise of the day happened in the crude oil arena when data showed that there was a “shocking” inventory built in crude and products, which sent oil into a tailspin with a loss of -5.02%, its biggest drop in 3 months. Widely held Energy ETFs like IGE dropped -1.89%.

Bond yields got a small lift today with the 10-year yield rising 4 basis points to end the day at 2.18%, which in turn helped the financial ETF XLF gain +0.77%. The US dollar interrupted its vicious downtrend of the past 5 months and bounced off yesterday’s lows by +0.12%.

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Market Sentiment Turns Jittery

Ulli Market Commentary Contact

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

For the second day, market nervousness prevailed, as concerns ahead of the UK general election, uncertainties about ex-FBI chief Comey’s upcoming testimony to the Senate, along with a Thursday ECB policy meeting, kept the major indexes subdued and stuck below their respective unchanged lines. However, as was the case yesterday, the pullback was minor.

Interest rates took another dive with the 10-year T-Bond losing 4 basis points to now yield +2.14%, which is a substantial drop from the beginning of March 2017 when the yield had reached +2.62%. What does it mean? Simple, if yields slide at this pace, it usually is a sign that the economy is heading towards a recession which, when reviewing the downright atrocious and worsening economic data points, appears to be a reasonable conclusion. The question seems to be not “if” but “when.”

The US dollar (UUP) followed suit by slipping -0.24% to a level last seen early October 2016. As is no surprise, this weakness has benefited gold, which is now in striking distance of reclaiming the $1,300 marker, which is a number gold has not been able to reach since around Election Day.

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Slipping Off The Record Highs

Ulli Market Commentary Contact

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

Geopolitical uncertainties, such as the London terrorist attack and the upcoming testimony of former FMI chief Comey, combined to pull the starch out of last week’s upward momentum. Not helping matters was the continuing weakness in the US Macro data index, which has slipped now to its lowest level since February 2016 when the markets were collapsing amid global recession fears.

To be clear, the pullback was tiny when looking at the bigger scheme of things and hardly worth mentioning. The major indexes traded in a tight range showing weakness into the close with especially SmallCaps being the laggard of the session.

Despite an early really, bank stocks reversed giving up most of their gains as interest rates dropped with the 10-year yield slipping 6 basis points not only end the day at 2.15%, its lowest since November 2016, but also breaking its 200-day M/A to the downside. The Dollar index (UUP) edged up a tad but remains at lows last seen in October 2016.

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One Man’s Opinion: …And Now For The Bad News

Ulli Market Review Contact

By Simon Black

In the late 1760s and early 1770s, the government of France was in a deep panic.

They had recently suffered a disastrous and costly defeat in the Seven Years War, and the national budget was a complete mess.

France had spent most of the previous century as the world’s dominant superpower, and the government budget reflected that status.

From public hospitals to shiny monuments and museums, social programs and public works projects, overseas colonies and a huge military, France had created an enormous cost structure for itself.

Eventually the costs of maintaining the empire vastly exceeded their tax revenue.

And by the late 1760s, France hadn’t had a balanced budget in decades.

Debt was ballooning, interest payments were rising, and the government of Louis XV was desperate to do something about it.

There’s a famous story in which the Comptroller-General of Finances summoned all the government ministers to make deep budget cuts.

But no one could come up with anything substantial.

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ETFs On The Cutline – Updated Through 06/02/2017

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 284 (last week 273) 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.