Grinding Back To The Unchanged Line

Ulli Market Commentary Contact

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

Two things pulled the rug out from early positive momentum at the opening. One, disappointing March auto sales, which should not have come as a surprise given the gigantic slip in retail sales including some 3,500 announced store closings, and two, the topic I have been pounding on lately, namely that questions about Trump’s pro-business stimulus plans continue to make headlines as to whether they really can be implemented in a timely manner. But, hope still prevails…

As we’ve seen many times before, the downside slip was contained, and the indexes spent the rest of the session grinding back towards the unchanged line but did not manage to cross it to the upside. Weakness in the markets was broad with the exception of Emerging Markets, which managed to gain +0.88%, while gold also closed up.

The dollar was modestly higher, but interest rates continued their recent downward slide with the 20-year T-bond (TLT) gaining +1.01%.

Adding to the general nervousness was news about a probable terrorist attack in Russia, which killed 10 people.

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One Man’s Opinion: The US Government Now Has Less Cash Than Google

Ulli Market Review Contact

Authored by Simon Black via SovereignMan.com,

In the year 1517, one of the most important innovations in financial history was invented in Amsterdam: the government bond.

It was a pretty revolutionary concept.

Governments had been borrowing money for thousands of years… quite often at the point of a sword.

But the Dutch figured out how to turn government loans into an “investment”.

It caught on slowly. But eventually government bonds became an extremely popular asset class.

Secondary markets developed where people who owned bonds could sell them to other investors.

Even simple coffee shops turned into financial exchanges where investors and traders would buy and sell bonds.

In time, the government realized that its creditworthiness was paramount, and the Dutch developed a reputation as being a rock-solid bet.

This practice caught on across the world. International markets developed.

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ETFs On The Cutline – Updated Through 03/31/2017

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 231 (last week 221) 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 March 31, 2017

Ulli ETF Tracker Contact

ETF Tracker StatSheet

https://theetfbully.com/?p=18736&preview=true

A Great Quarter Ends With A Whimper

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

While it was a great quarter for the indexes, it ended with a whimper as equities could not sustain the upward momentum into the close. Most of the gains were made in January and February while March was a non-event month for the S&P 500, which went predominantly sideways and ended up losing 1 point, while gaining a solid 5.5% for the quarter.

On the downside, energy was the big loser for Q1, financials rallied for the first 2 months peaking on March 1, after which it was downhill with a late bounce off the unchanged line. Tech was the big winner and was well represented by the performance of SMH, which is featured in our “ETFs in the Spotlight” column (section 2).

The one-way trade award for the quarter goes to the US dollar which, despite a February rebound, ended up to the downside in the process supporting gold, which continued its upward march off the December lows. SmallCaps lost some of their luster this month but managed to get back within striking distance of the unchanged line.

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Weekly StatSheet For The ETF Tracker Newsletter – Updated Through 03/30/2017

Ulli ETF StatSheet Contact

ETF Data updated through Thursday, March 30, 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 +2.69% after having generated a new Domestic Buy signal effective 4/4/2016 as posted.

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Dollar Rallies And Pushes Equities Higher

Ulli Market Commentary Contact

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

The US dollar rallied for the 3rd day in a row (+0.54%) and conquered its psychologically important 100 level. The main support came from the latest 4th quarter 2016 GDP upward revision from 1.9% to 2.1%, which may help the dollar to notch its first weekly advance in three.

Crude Oil joined the upward thrust by adding +1.58% and reclaiming the $50 barrier for the first time in a couple of weeks. Who knows how long that will last as this move was based on the latest jawboning by Kuwait’s oil minister in regards to talks on extending production cuts. Yes, we’ve seen that movie before, and we know how it ends.

It appeared that the Trump trade, which showed signs of weakening throughout most of March, was back on today as some of the recent “weaklings” like transports and small caps managed to gain the most. Banks as well ended to the plus side, interest rates rose with the 10-year Treasury yield ending at 2.42%, while gold headed south and lost -0.80%.

The question in my mind is whether today was just an aberration attributable to quarter-ending window dressing or a return to the Trump trade. I don’t think we’ll find out tomorrow, the last day of the month, but we might get a better idea next week if today’s upward momentum has legs.

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