Markets Plunge Amid Global Tariff Concerns, Bitcoin Rebounds Strongly

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

  1. Moving the market

This morning, the markets underwent a sharp sell-off as the impact of Trump’s tariffs on key trading partners, Canada, and Mexico, echoed globally.

Concerns about a potential escalation into a full-blown trade war, disruption of worldwide supply chains, economic slowdown, and rising inflation are valid. However, it remains to be seen if today’s market reaction was an overreaction, as is often the case.

Over the weekend, Bitcoin led the decline, dropping to $93,000 before rebounding and surpassing the $100,000 milestone, eventually reaching $102,000. This strong recovery was partly driven by Trump’s announcement of plans to establish a Bitcoin Sovereign Wealth Fund, a promise from his campaign.

In other news, Mexico announced the deployment of 10,000 National Guard members to prevent drug trafficking to the US, prompting Trump to delay the tariffs for a month. This brief trade war appears to be over, and major indexes have started to recover, reducing some of their early losses.

The US Dollar experienced volatility, oil prices gave up recent gains, and gold, after tumbling overnight, rebounded strongly to end the session at a new record high.

Bond yields were mixed, reflecting uncertainty about the direction of interest rates amid ongoing global trade tensions, with the EU potentially next in line for tariffs.

Who needs a movie when you can be part of this latest market excitement?

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ETFs On The Cutline – Updated Through 01/31/2025

Ulli ETFs on the Cutline Contact

Do you want to know which ETFs are hot and which ones are not? Then you need my High-Volume ETF Cutline report. It tells you how close or far each of the 311 ETFs I follow is from its long-term trend line (39-week SMA). These are the ETFs that trade more than $5 million a day, so they are not some obscure funds that nobody cares about.

The report is split into two parts: The winners that are above their trend line (%M/A), and the losers that are below it. The yellow line is the line of shame that separates them. You can see how many ETFs are in each group and how they have changed since the last report (180 vs. 178 current).

Take a peek:

The HV ETF Master Cutline Report

If you are confused by some of the terms we use, don’t panic. I have a helpful Glossary of Terms for you.

If you want to learn more about the Cutline method and how it can make you rich (or at least less poor), read my original post here.

ETF Tracker Newsletter For January 31, 2025

Ulli ETF Tracker Contact

ETF Tracker StatSheet          

You can view the latest version here.

GOLD HITS RECORD HIGHS AS MARKETS REACT TO TARIFFS AND INFLATION

[Chart courtesy of MarketWatch.com]

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Despite Apple releasing a mixed earnings report, bullish sentiment persisted through mid-session on the last trading day of the month.

However, investor confidence waned later in the day as bond yields spiked and President Trump’s tariffs on Canadian and Mexican goods were set to take effect the next day. This shift in sentiment caused the major indices to end the day in the red.

Apple exceeded first-quarter expectations but reported disappointing iPhone sales. Despite this, traders focused on the positive aspects, and the stock gained 1.6%. In contrast, Chevron and Exxon reported fourth-quarter results below expectations, leading to declines of 4.5% and 2.5%, respectively.

A key data point, the Personal Consumption Expenditure (PCE) price index, which is the Federal Reserve’s preferred inflation gauge, showed a 0.3% increase from November and a 2.6% annual rate. While this was in line with expectations, it highlighted the ongoing rise in inflation, accelerating from the previous month’s rate of 2.4%. Could this be why gold is reaching new all-time highs?

Despite a rocky month, the major indices managed to recover from various selloffs and posted solid gains. The Dow led with a 4.7% increase, followed by the S&P 500 at 2.7%, and the Nasdaq at 1.5%.

Traders viewed this month as a “goldilocks” period, with growth data exceeding expectations and inflation data being less severe than anticipated, reinforcing the belief that the economy is growing while inflation is slowing.

The US dollar ended the month lower despite today’s spike. Mega-cap tech stocks recovered from the “DeepSeek” scare, while the most shorted stocks were hit hard due to Trump’s tariff announcement.

Oil prices remained unchanged for January, but gold rallied over 7%, marking its best start to a year since 2015 and reaching a record high of $2,800. Bond yields saw volatility, initially spiking before selling off and ending the month lower. Bitcoin also had a strong month, advancing nearly 9% and emerging as the top performer.

With Nvidia experiencing its biggest weekly loss of $450 billion since September 2022, ZeroHedge pointed to a historical analog, prompting the question:

Will history repeat itself?

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Weekly StatSheet For The ETF Tracker Newsletter – Updated Through 01/30/2025

Ulli ETF StatSheet Contact

ETF Data updated through Thursday, January 30, 2025

How to use this StatSheet:

  1. Out of the 1,800+ ETFs out there, I only pick the ones that trade over $5 million per day (HV ETFs), so you don’t get stuck with a lemon that nobody wants to buy or sell.
  1. Trend Tracking Indexes (TTIs)

These are the main indicators that tell you when to buy or sell Domestic and International ETFs (section 1 and 2). They do that by comparing their position to their long-term M/A (Moving Average). If they cross above, and stay there, it’s a green light to buy. If they fall below, and keep going, it’s a red light to sell. And to make sure you don’t lose your shirt if things go south, I also use a 12% trailing stop loss on all positions in these categories.

  1. All other investment areas don’t have a TTI and should be traded based on the position of each ETF relative to its own trend line (%M/A). That’s why I call them “Selective Buy.” In other words, if an ETF goes above its own trend line, you can buy it. But don’t forget to use a trailing sell stop of 12%, or less if you’re feeling nervous.

If some of these words sound like Greek to you, please check out the Glossary of Terms and new subscriber information in section 9.

  1. DOMESTIC EQUITY ETFs: BUY— since 11/21/2023

Click on chart to enlarge

This is our main compass, the Domestic Trend Tracking Index (TTI-green line in the above chart). It has broken above its long-term trend line (red) by +5.75% and is in “Buy” mode as posted.

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Markets Edge Higher Amid Earnings Deluge; Tesla And Meta Shine

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

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The markets saw a slight uptick after the opening bell as traders navigated a flood of earnings reports from several mega-cap companies.

The overall outcome was positive for the major indexes, with Meta gaining 1.6% and Tesla rising 2.9%. However, Microsoft fell over 6% due to a disappointing revenue forecast. Notably, Tesla managed to shrug off both an earnings and revenue miss.

Looking ahead, Apple is set to report its earnings after the close today, while Amazon’s report is scheduled for next week. Nvidia also weighed on the market early, initially slipping nearly 4% before recovering to close 1% higher.

In economic news, fourth-quarter GDP growth was reported at 2.3%, falling short of the expected 2.6%. Additionally, pending home sales plunged 5.5% month-over-month in December, as high mortgage rates continued to reduce affordability.

Following Monday’s DeepSeek carnage, the most shorted stocks reversed direction, rallied, and provided support to equities in general. Bond yields experienced significant volatility but ended the day nearly unchanged.

Bitcoin continued its relentless climb towards all-time highs, rallying to $106,000 and erasing all of Monday’s losses.

Oil prices spiked on news of tariffs announced by Trump, while gold surged to a new record high, closing just shy of $2,800. A further 7% rise would push gold to the coveted $3,000 level.

Will gold reach this milestone in the first half of 2025 or the second?

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Tech Stocks Hit Hard As Fed Maintains Rate; Bitcoin Surges

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

  1. Moving the market

After yesterday’s comeback rally, equities slipped this morning ahead of the Federal Reserve’s latest policy decision on interest rates, expected after 11 am PST.

The odds were nearly 100% that the Central Bank will maintain rates within the target range of 4.25% to 4.5%. As usual, traders are primarily focused on Chairman Powell’s comments, especially since this is his first press conference in President Trump’s second term.

The Fed met Wall Street expectations by pausing rates as anticipated. However, Powell’s statement was somewhat more hawkish compared to last month, particularly with these notable points:

**FED: UNEMPLOYMENT ‘STABILIZED,’ LABOR MARKET REMAINS ‘SOLID’**

**FED: REMOVES REFERENCE TO INFLATION MAKING PROGRESS TOWARD GOAL**

As ZeroHedge pointed out, a strong labor market combined with no progress on inflation does not suggest rate cuts anytime soon.

The major indexes reacted negatively, reversing some of yesterday’s gains. The Staples and Utilities sectors benefited, while Technology and Real Estate were the biggest losers.

Nvidia, after recovering yesterday, took another 4% hit. Mega-Cap tech stocks initially dropped but managed to cut some early losses. However, their performance ahead of this afternoon’s earnings reports from META, MSFT, and TSLA remains to be seen.

Bond yields surged initially but ended the session only slightly higher, with the 10-year yield swinging wildly intra-day. Rate-cut expectations tumbled, the dollar initially jumped then fell, gold slipped, but Bitcoin surged towards $105k, erasing Monday’s losses.

With President Trump calling for lower rates and the Fed maintaining its stance, will there be more contention ahead?

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