Almost Reaching Dow 20,000

Ulli Market Commentary Contact

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

The recklessness and utter abandon with which the markets have been rallying, since the election, is simply astounding. Caution, risk aversion or view of economic fundamentals do either not exist or are simply ignored. It is financial engineering combined with market manipulation at its finest.

Such was the case again today as the Dow attempted to breach the 20,000 level but failed; however, the dollar kept on chugging along and rose to its highest levels in 14 years, which is not a good thing for companies involved in exports due to them possibly being priced out of some markets. About 40% of the S&P 500 members are selling internationally and any possible fallout will sure be known over the next two quarters.

Wall Street’s focus and the main driver of this rally remain fixed on one thing and one thing only: The Trump agenda with its tax cuts, infrastructure spending, deregulation and the subsequent anticipated boost to businesses.

In the end, it’s nothing but hope with 2017 economic growth expectations remaining stuck near cycle lows as the chart shows:

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Edging Higher On A Tumultuous Day

Ulli Market Commentary Contact

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

It was a reluctant rally with investors being hesitant considering that the major indexes were still hovering near all-time highs; bond markets finally managed to stage a modest recovery after the drubbing of the past few weeks.

Not helping matters were reports from Germany that a truck ran into a crowded Christmas market in Berlin killing 9 and injuring an estimated 50 people. In Turkey, the Russian Ambassador in charge of Syrian piece-talks was attacked and killed as he was getting ready to give a speech.

And, of course, today was voting day for the Electoral College the official result of which will not be known until early next year.

Hong Kong stocks corrected, Italian banks crashed, the NYSE suspended trading for a while, after which equities rallied, and we’re still waiting for the moment in time that the Dow hits the 20,000 level or has two down days in a row, which it has not seen for 7 weeks.

It was a tumultuous day with no clear direction.

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One Man’s Opinion: Don’t Be Fooled. The Trump Rally Is Not A Sign Of Economic Health

Ulli Market Review Contact

OneMan'sOpinionSubmitted by Steven Horowtiz via The Foundation for Economic Education,

The headlines tell us that the Dow Jones is up around 1,000 points since Donald Trump won the election on November 8th. The conventional wisdom is that this shows how much confidence people have in Trump’s ability to generate a healthy American economy. The argument is that if people are willing to buy stock in American firms, this indicates their belief that those firms will see improving profits over the next few years. They then draw the conclusion that more profitable firms indicate a healthier American economy.

Although this argument is correct about stock prices reflecting an increasing belief in the profitability of US firms, it makes a major error in assuming that profitable firms necessarily mean a better economy.

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ETFs On The Cutline – Updated Through 12/16/2016

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 206 (last week 223) are hovering in bullish territory. The yellow line separates those ETFs that are positioned above their trend line 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 December 16, 2016

Ulli ETFs on the Cutline Contact

ETF Tracker StatSheet

https://theetfbully.com/2016/12/weekly-statsheet-for-the-etf-tracker-newsletter-updated-through-12152016/

Market Commentary

Coming Off The Pre-Fed Higs

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

Equities slipped today as upward momentum started to wane after Tuesday’s pre-Fed rally. For the week, the S&P 500 gave back 2 points, which makes it just about an unchanged performance.

Today’s weakness was the result of several events. On the economic side, some geopolitical tensions surfaced as a Chinese Navy warship seized an underwater drone deployed by an American oceanic vessel, which was operating in international waters of the South China Sea.

In the corporate world, Deutsche Bank admitted that it misled investors and violated securities laws and agreed to pay more than $40 million to settle charges. But, of course, as is customary these days, the fine takes the place of any prison term.

On the economic front, housing starts and permits crashed in November 18.7% MoM, almost the biggest monthly plunge since 2005. And just one day after China halted trading in bond futures for the first time ever, today’s news that it failed to sell all T-Bills to be auctioned for the first time in 18 months, indicates that bond traders are concerned that interest rates could spike much higher in the future.

And that could be the canary in the coalmine that will eventually derail the equity markets as I posted yesterday. The key is to watch bond yields which can serve as an early warning sign of things to come in the wide world of stocks. Here’s another chart that makes this abundantly clear:

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Weekly StatSheet For The ETF Tracker Newsletter – Updated Through 12/15/2016

Ulli ETF StatSheet Contact

ETF Data updated through Wednesday, December 15, 2016

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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

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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 +1.31% after having generated a new Domestic Buy signal effective 4/4/2016 as posted.

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