Equities Mixed; S&P 500 Touches 2,300

Ulli Market Commentary Contact

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

It was pretty much a day of consolidation after the Dow pierced the 20k milestone yesterday, however, the S&P 500 managed to touch the 2,300 level but backed off and closed 3 points below it.

Weighing on the S&P and Nasdaq was Qualcomm, which gave back 5% after a lower-than-expected rise in quarterly revenue. Still, the Dow managed to hold on to its 20k level and added 0.16% for the day.

Besides Trump’s business friendly decisions, earnings were center stage, have boosted sentiment and are expected to show a growth of 7%, which would make it the biggest increase in a couple of years. So far, 146 companies have reported earnings through this morning. 69.2% have topped expectations compared to an average of 63.6% over the last 23 years.

As I have posted repeatedly, reality and the stock market are two different and entirely separate things. Take a look at this chart, courtesy of ZH:

Read More

Dow Slices Through The 20,000 Milestone Marker

Ulli Market Commentary Contact

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

It seemed like forever, but it’s been only 28 days of treading water before upward momentum was sufficient enough to conquer the 20k milestone. Looking back to the 800 plus point drop in the Dow during election night, which appeared to signal a return to bear market territory, it’s been a truly remarkable recovery off the lows resulting in a 10% gain.

Keep in mind, however, that the Dow only represents 30 companies, of which only 6 stocks, namely GS, BA, IBM, UNH, HD and JPM, were responsible for 50% of the gains. Just as noteworthy is the fact that GS alone accounted for 21% of the Dow’s increase.

Interest rates rose with the 10-year Treasury yield now settling at 2.53%. Recall that several top bond managers forecast a negative effect on equities should the yield settle within the 2.6% to 3% area. As yields rose today, bonds got clobbered with the widely held TLT giving back -1.26% for the day.

The dollar weakened again, which should have been positive for gold but wasn’t today, as the yellow metal lost -0.90%. President Trump, along with others, has called the dollar overvalued and, as if on command, it’s been sliding all year. Here is the updated chart along with the divergence to the S&P 500:

Read More

Earnings Push S&P 500 And Nasdaq To New Highs

Ulli Market Commentary Contact

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

Today it was a battle between earnings and uncertainty over Trump’s pro-business agenda. At least for today, earnings won the battle, and the major indexes rode the positive momentum higher. The materials and financial sectors fared the best climbing 2.5% and 1.2% respectively.

With earnings season heating up, so far S&P profits are supposed to have risen some 6.7% in the last quarter which, if true, would make it the strongest growth in a couple of years. However, valuation-wise, we have moved towards lofty levels with the post-election rally, which was based on nothing but hope and promises. Given that, the S&P 500 is trading at about 17 times forward 12-month earnings, which is far above the 10-year median of 14.2.

Then again, none of that matters, it’s up, up and away until one day you’ll hear this giant sucking sound when the air comes out of the bubble; it’s not a matter of “if” but “when.” In the meantime, we’ll stay the course and follow the major trend higher until it ends.

Read More

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.

Read More

One Man’s Opinion: Donald And The Dollar

Ulli Market Review Contact

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.

Read More

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.