ETF Tracker Newsletter For May 26, 2017

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ETF Tracker StatSheet

https://theetfbully.com/2017/05/weekly-statsheet-etf-tracker-newsletter-updated-05252017/

PUSHING HIGHER

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

Despite treading water all day, the S&P 500 and Nasdaq managed to crawl slightly above the unchanged line, thanks to a last minute levitation, thereby closing at another all-time high. Today’s assist came from a rise in consumer discretionary stocks like Best Buy (BBY), which pulled back a little today after adding +21.5% on Thursday.  Even oil showed some signs of life after yesterday’s drubbing by gaining +1.80%.

Today’s gains, although tiny, had nothing to do with improving fundamentals, which still leave a lot to be desired of, to say it mildly. Case in point is the US Macro data index, which now has fallen to 15-month lows, as well as the Nasdaq Composite, the Earnings Expectations of which have slumped to 2017 lows; but, none of these data points matter, until one day when they do.

CitiBank came out forecasting that a close today above 2,405 on the S&P 500 suggests we can rally towards 2,500+ in the coming weeks. While that is a positive prediction, I prefer not to guess but to use my Domestic Trend Tracking Index (TTI) for directional guidance. The TTI is currently deeply entrenched on the bullish side (see section 3), and we will follow its trend until it either ends or our trailing sell stop points give the signal to exit.

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Weekly StatSheet For The ETF Tracker Newsletter – Updated Through 05/25/2017

Ulli ETF StatSheet Contact

ETF Data updated through Thursday, May 25, 2017

Methodology/Use of this StatSheet:

  1. 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.
  2. 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.

  1. 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.

 

  1. 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 +3.78% after having generated a new Domestic Buy signal effective 4/4/2016 as posted.

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S&P 500 And Nasdaq Eke Out New Record Highs

Ulli Market Commentary Contact

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

After the break through the glass ceiling yesterday, the major indexes managed to maintain upward momentum to score gains for the 6th consecutive day recovering all losses sustained during last week’s dump. While the Dow lagged, the S&P and Nasdaq shot up into record territory.

Stocks still felt good the morning after digesting the Fed minutes, disregarding the warnings, and focusing on the hope that Fed members are basically in agreement that there will be a “very gradual and thoughtful balance sheet normalization process.” Some good earnings gave an assist as well.

All this good mojo was enough to push equities higher, which helped traders to simply ignore some bad news, namely that crude oil got spanked at the tune of -5.16% pushing the black gold solidly below the psychologically important $50 level to close at $48.71.

With so much green on the board, bonds joined in and rallied with the 20-year Treasury TLT gaining a tad. The US dollar showed signs of life again with UUP adding +0.12%, and precious metals closed higher as well. Even the VIX, which usually moves opposite of the S&P 500, decided it must be opposite day and edged higher.

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Last Hour Surge Pushes Indexes To Record Highs

Ulli Market Commentary Contact

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

I’ve been mentioning the glass ceiling during recent posts, and today was the day when the S&P 500 managed to break out of a 4-day sideways pattern to close the session at a new record but only by a tiny margin while setting a 2017 volume low.

Most of the day was spent treading water as traders awaited the minutes from the last FOMC meeting, which indicated broad agreement on plans to begin shrinking the Fed’s balance sheet and also remain on target to ‘perhaps’ hike rates next month.

Things got really nutty in the markets, when the Fed said:

“Asset valuation pressures in some markets were notable…vulnerabilities appeared to have increased for asset valuation pressures…a sharp decline in such valuations could pose risks to financial stability.”

A very clear message, but the markets took it as a positive (huh?), and the S&P and Nasdaq went on set new record highs. Sometimes you just have to laugh…

The US dollar hit the skids again after yesterday’s rebound with UUP slipping -0.32%. Treasury yields fell with the 20-year bond TLT gaining +0.56% joined by gold and silver, which both closed in the green.

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Bouncing Against A Glass Ceiling

Ulli Market Commentary Contact

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

The major indexes managed to stay above the unchanged line throughout the session (on low volume) and kept bouncing against the invisible glass ceiling also known as new all-time highs. There was not enough momentum to break through, and it appears that we’ll be having a fairly quiet week as far as politics is concerned as Trump is still traveling outside the US.

Market levels remain totally disconnected from underlying economic realities with the US Macro data indicator dumping to its lowest point since February 2016 (see chart below) when the markets were about to crash but were saved thanks to Fed intervention.

Here are some of the more visible components:

  1. New home sales for April plunge 14.4% MoM
  2. Biggest drop occurred in the West, which saw a 26.3% collapse
  3. Manufacturing slumps to 8-month lows

Treasury yields spiked to their highest level in a week, which gave the US dollar an excuse to rally for a change (UUP +0.44%) but kept a lid on stock advances while also pushing gold lower and towards the 1,250 level.

At the end of the session, we closed in the green, but the Macro data chart below leaves me wondering ‘what’s next?’ if we had a true market that was left to its own devices:

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Stocks And Precious Metals Jump; Dollar Slips

Ulli Market Commentary Contact

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

Another effort to push equities back to levels reached prior to last Wednesday’s sell-off was successful with all three major indexes gaining for the third day in a row as the S&P 500 is now lurking within 8 points of its all-time high and is back in the green for May. However, the fly in the ointment over the past few days has been low volume, which indicates lack of participation in this rally.

President Trump’s trip to Saudi Arabia proved to be beneficial for defense stocks as he signed a mammoth weapons deal, which lifted ITA +1.12% for the day. Interest rates climbed slightly with the 10-year yield reaching 2.25%. The US dollar continued its freefall with UUP losing another -0.16% reaching a level last seen in October 2016. Apparently Trump’s tough talk of “the dollar is too strong” seems to be working.

Precious metals gained on the day and following through from last week’s rally. Crude oil joined the party and recaptured the $50/barrel level but just stayed below $51. Of course, oil has been on a wild roller coaster ride this year ranging from a high of $55.03 to a low of $43.76 thanks to endless OPEC jawboning about production cutbacks, which have been making the headlines almost daily.

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