Trade Concerns Pull Equities Lower—Gold Up

Ulli Market Commentary Contact

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

While equities started the day on a negative note, they did improve throughout the session and ended only fractionally lower. The post-election rally hit another snag as Trump’s protectionist stance on trade did nothing to soothe the bullish crowd on Wall Street.

First, Trump signed paperwork to formally withdraw the US from the widely criticized and secretive Trans Pacific Partnership (TPP) trade pact. Second, he confirmed his intentions to renegotiate NAFTA, the North American Free Trade Agreement. All this adds up to change and uncertainty, which are two words that are likely the most hated ones on Wall Street.

The energy sector was pressured again, as crude oil pulled back from a recent rally. Interest rates were lower while the US dollar fell again giving a continued boost to precious metals. For better or for worse, Trump’s agenda is in full swing, and we will have to wait and see how things play out in regards to the continuation of the current bull market. More clarity is needed to see which way the pendulum between bulls and bears will swing.

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One Man’s Opinion: Donald And The Dollar

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Authored by Antonius Aquinas via Acting-Man.com,

No Country Can be Made Great by Devaluation

John Connally, President Nixon’s Secretary of the Treasury, once remarked to the consternation of Europe’s financial elites over America’s inflationary monetary policy, that the dollar “is our currency, but your problem.”  Times have certainly changed and it now appears that the dollar has become an American problem.

Richard Nixon and his treasury secretary John Connally. The latter is today mainly remembered for his remark on the dollar, which presumably gave European finance ministers a few nightmares at the time. Nixon defaulted on the gold exchange standard in 1971, which effectively ended the Bretton Woods agreement and led to the whole world adopting a fiat money standard. Nixon’s announcement of the default stands to this day as a textbook example of government lies and hypocrisy, garnished with a more than generous helping of economic illiteracy. It seems unlikely that he realized that his actions on that day would give birth to the greatest credit bubble in history, but they did.

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ETFs On The Cutline – Updated Through 01/20/2017

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 228 (last week 237) 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 January 20, 2017

Ulli Market Commentary Contact

ETF Tracker StatSheet

https://theetfbully.com/2017/01/weekly-statsheet-for-the-etf-tracker-newsletter-updated-through-01192017/

Gold Pops As Dollar Drops

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

An early rally gave way to a pullback, but the major indexes managed to claw back towards the end of the session and closed up but, for the week, the S&P 500 lost modestly by surrendering 4 points.

Of course, the inauguration took center stage as Trump was sworn in as the 45th President. Today’s modest advance in the markets marks the first time in more than 50 years that a new commander-in-chief has been greeted by rising equities on his first day in office.

Gold continued on its upward path and still remains 2017’s winner YTD while the Dow barely moved to the plus side. Financials suffered their worst week since early September 2016, and the dollar index fell for the 4th consecutive week, which is its longest losing streak in almost a year.

History shows that, aside from the first day, the S&P 500 has fallen by a median 2.7% in the month after each new president has taken over the White House since Herbert Hoover in January 1929, according to Reuters. Let’s wait and see if Trump can break this dubious record as his presidency gets underway.

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Weekly StatSheet For The ETF Tracker Newsletter – Updated Through 01/19/2017

Ulli ETF StatSheet Contact

ETF Data updated through Thursday, January 19, 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 +1.36% after having generated a new Domestic Buy signal effective 4/4/2016 as posted.

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Equities Fall Ahead Of Inauguration

Ulli Market Commentary Contact

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

It was a mixed bag with upbeat economic news not being able to offset the anxiety about tomorrow’s inauguration. Besides sinking equities, bonds and gold dropped as well while the US dollar and crude oil bucked the trend and closed up.

On the economic front, housing starts rose but building permits inched slightly lower. Weekly initial jobless claims declined by 15k to 234k last week, which was below forecasts of 254k.

With the elite meeting in Davos, Switzerland, being in full swing, I saw this story confirming what I have been saying for a long time that all markets are manipulated by central banks. In this almost humorous article, China orders no market selloffs during President’s Davos trip:

State-owned investors bought shares to steady the market on Monday, while some funds were guided on Tuesday not to sell holdings with big weightings in benchmark indexes, the people said, asking not to be identified because they aren’t authorized to discuss the matter publicly. China’s securities regulators asked funds and brokerages to trade prudently this week and directed exchanges to report any abnormal transactions, the people said.

To be sure, Chinese authorities have traditionally intervened in markets before and during events of political significance, with government funds stepping in to boost stocks before a key meeting of the National People’s Congress last year and before a 2015 military parade celebrating the 70th anniversary of the World War II victory over Japan.

This is simply another confirmation that market manipulation is alive and well.

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