Nasdaq Continues Ascent Into Record Territory

Ulli Market Commentary Contact

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

The major indexes limped around their respective unchanged lines all day with only the Nasdaq crawling above it and in the process setting another record close (10 up days in a row). Another soft economic data point disappointed as the Philly Fed survey missed expectations and slumped to its lowest point since November 2015. The survey summed up that “new orders collapsed, employees tumbled and the average work week slumped.” Not exactly awe inspiring, but in this new normal environment, any type of news are good for stocks.

The VIX tanked and thereby was the savior of the day as hawkish talk from BoJ and ECB could not derail the major indexes. However, what was derailed was the US dollar, which took another hit as UUP (-0.61%) dove to its lowest level since last August and making it 8 down days out of the last 10 sessions.

Interest rates leaked lower helping utilities (XLU) gain +0.69% while the 20-year T-Bond managed to tack on +0.29% and keeping its rebound off the 200-day M/A alive and well for the time being. Gold knee jerked and closed in the green while Crude oil went the other way and lost -0.83%.

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Low Volume, No News, Markets In Record Territory

Ulli Market Commentary Contact

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

Despite IBM being a drag on the Dow (about -47 points), and the Transportation index (IYT) stumbling for the third day in a row, its biggest drop in 2 months, all three major indexes were able to march into record territory on low volume and no earthshaking news.

Helping the bullish cause were better-than-expected earnings from Morgan Stanley, which helped to create some optimism in the face of a slowing economy and, at least for the day, lent support to the current lofty index levels.

Across asset classes, SmallCaps took top billing with SCHA gaining a solid +1.02%, which was closely followed by Semiconductors (SMH) and MidCaps (SCHM) adding +0.99% and +0.94% respectively. Financials struggled but ended up in the green and Retail continued its recent bounce. Interest rates remained unchanged, while the US dollar (UUP) did its best dead-cat-bounce imitation by gaining +0.24%.

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Netflix Pushes Nasdaq To Record Highs

Ulli Market Commentary Contact

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

The major indexes spent most of the day below unchanged line. However, thanks to the upward bias in part caused by Netflix reaching nosebleed territory with a P/E ratio of 197, higher than Amazon’s 190, the Nasdaq set another record. Netflix surged over 13% thanks to a surprise jump in international subscriber numbers.

The Dow and S&P lagged but managed to climb out of an early hole as the VIX was pushed down to ensure a positive close. Amazingly, the Nasdaq managed this melt-up despite a negative advance/decline ratio, which simply confirms that it was all about Netflix with the rest of the market meandering.

US macro data kept weakening, which caused bond yields to tumble to their lowest level since June and in the process helping equities to wipe out early losses. The 20-year T-bond was the beneficiary and gained +0.87% on the day. Oil rebounded and gold had another good session by conquering its 200-day M/A. Of course, the has to be a loser and that was again the US dollar (UUP) which, after 2 days of stability, got spanked again and closed down -0.53%, its lowest point since early September 2016. YTD, UUP has now lost a staggering -8.9%.

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Hugging The Unchanged Line

Ulli Market Commentary Contact

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

The major indexes zigzagged throughout the day but stayed close to the unchanged line, and that’s where we ended up with only the Nasdaq closing fractionally higher. On the front burner is much anticipation about the upcoming earnings season with some key quarterly results due out later this week.

On the day, healthcare and financials dipped a modest -0.3% while utilities gained 0.4%, but the retail ETF XRT turned out to be the winner by adding +0.95% which, when looking at the 1 year chart, looks like another dead cat bounce.

China stocks took an overnight dive with their SmallCaps tumbling to a low last seen in early 2015. That brings the loss to 10%; just for the last week. Interest rates retreated with the 20-year T-bond ETF TLT gaining +0.28%. The US dollar meandered and UUP closed unchanged. Crude oil leaked lower, but the precious metals continued to show signs of life by closing higher for the 5th out of the last 6 days.

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One Man’s Opinion: Argentina Issues 100-year Bond. What Could Possibly Go Wrong?

Ulli Uncategorized Contact

By Simon Black

Apparently while I was in the air yesterday flying between Asia and Europe, the financial system proved once again that it believes in magic beans.

The latest absurdity is that the government of Argentina sold $2.75 billion worth of bonds yesterday afternoon.

It’s not strange or unusual for a government to sell bonds; it happens multiple times across the world nearly every single day of the year.

What’s totally insane about yesterday’s bond sale in Argentina, though, is the duration of these particular bonds.

Remember that a bond is similar to a loan; as an investor, you’re basically loaning money to whichever government issues the bond.

And, like a loan, a bond has a maturity date– the date at which the government is supposed to pay you back the “face value” of the bond.

Car loans often have a 3-7 year term. Student loans can easily go 10 or 15 years. A home mortgage can last 30 years.

It’s the same with government bonds, which often have a term up to 30 years.

Needless to say, the longer the term, the riskier the bond. Plenty of things can go wrong if you give governments enough time to screw up.

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ETFs On The Cutline – Updated Through 07/14/2017

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 277 (last week 246) 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.