ETF Tracker Newsletter For February 10, 2017

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ETF Tracker StatSheet

https://theetfbully.com/2017/02/weekly-statsheet-etf-tracker-newsletter-updated-02092017/

Trump’s Tax Talk Boosts Markets

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

Yesterday’s theme of renewed optimism caused by Trump’s tax talk continued through today’s session with the major indexes rising to all-time closing highs, although the gains were less than the day before. The only fly in the ointment was that volumes have decreasing as the indexes have been rising, which makes this rally a little suspect.

Additionally, volatility for the S&P 500 has been crushed to its lowest in 10 years; we have now had 85 days in a row without a 1% drop, 44 days without a 1% close to close gain or loss and 39 days without a 1% intra-day swing. These are not signs of a normal market but of a manipulated market.

Nevertheless, the bullish trend continues for the time being with today’s support coming from a spike in oil prices, which pushed the energy sector higher. All eyes continue to be on Trump next week as we are sure to see more announcements, some of which may give a further assist to the equity markets.

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Weekly StatSheet For The ETF Tracker Newsletter – Updated Through 02/09/2017

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ETF Data updated through Thursday, February 9, 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 +2.39% after having generated a new Domestic Buy signal effective 4/4/2016 as posted.

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One Promise Drives Major Indexes To Record Highs

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

The stagnated rally of the past few days, during which Wall Street was looking for more details about Trump’s agenda, was revived today when he stepped up to the plate and said that “he would make a major tax announcement in a few weeks.” He also added that “lowering the overall tax burden on American business is big league” without giving any further indication as to what this might entail.

That’s all it took, and the major indexes scored a triple with all three of them gaining over +0.5% for the session. Financials performed the best by gaining +1.4% and were closely followed by energy with +0.9%, while the conservative utilities sector gave back -0.8%.

Trump’s announcement overrode even poor earnings news from Twitter (-12.3%), Intel (-2.5%) and Coca Cola (-1.8%). Bonds sold off as interest rates rose with the US-10 year yield gaining 6 basis points to 2.40%, as the 30-year bond yield spiked back above the 3% level to end at 3.02%.

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Eking Out A Small Gain

Ulli Market Commentary Contact

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

Mixed earnings and slipping bank stocks put a damper on the major indexes, which started the session below the unchanged line. This would normally be the time in the quarter where earnings are front and center, but not this time; the rally has stagnated recently, as Wall Street prefers to look for more details about Trump’s economic agenda.

Still, we continue to hover around record highs with any pullbacks being limited via Fed intervention. For today, banks slipped as bond yields got hammered, losing 6 basis points, or 2.5% causing TLT to rally at the tune of +1.36%.

The dollar dropped but gold was the savior and rallied +0.53%, which is its 8th day of gains out of nine. Here’s another dubious record: The S&P 500 has now traded for 37 days in a row without a 1% intra-day move and 81 days in a row without a 1% drop. If that is not market manipulation, I don’t know what is.

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Hawkish Comment Equals Uncertainty

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

An early euphoric bounce, which pushed the Dow and Nasdaq to new intra-day highs faded and then took a nose-dive below the unchanged line before recovering slightly into the close. The morning strength was caused by the US dollar rallying sharply as hawkish comments from one of the Fed’s mouthpieces indicated that “March was live” and three rate hikes were still on the table.

I am not sure how much of that was empty jawboning but the dollar rally reversed later on leaving the gain at a more modest +0.50%. Treasury bonds rallied with TLT gaining +0.74% for the day. Adding to the confusion are the upcoming (March) debt ceiling talks, the outcome of which will for sure have an impact on just about all asset classes.

The weakling of the day was Crude Oil, which not only lost -1.40% but also broke below its 50 DMA (Daily Moving Average) which, after having served as a springboard for weeks, has now become a ceiling and could spell more weakness for the sector. On the other end of the spectrum was gold, which broke above its 100 DMA by gaining another +0.28% and has now risen 7 out of the last 8 days.

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Slipping And Dippping

Ulli Market Commentary Contact

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

All of today’s activity happened below the unchanged line with the energy sector dropping (-0.9%) as oil prices slipped and gave back -1.37%. Of course, after Friday’s climb into record territory, a pause was in order with Wall Street awaiting the next run of earnings reports along with more clarity on Trump’s policies.

On the other hand, the post election run has been nothing but euphoric, and there has to be some realization that, despite all good intentions, Trump simply can’t get everything resolved within the first 100 days. I expect this realization, along with concerns about the backlash against protectionist policies from Washington and around the world, to cause more uncertainty in the market place.

Nine of the 11 major S&P sectors closed down along with Treasury yields while the US dollar pumped and dumped only to end the session unchanged. The winner of the day and for the year so far, was gold, which added +1.34%.

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