One Man’s Opinion: Three Reasons Why The Banking System Is Rigged Against You

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OneMan'sOpinionBy Simon Black

If there were ever any doubt about how completely RIGGED the banking system is against depositors, allow me to introduce the following:

Exhibit A: Governments are working to make banks LESS safe

Yesterday an unelected bureaucrat that no one has ever heard ofmade a stunning announcement that has sweeping implications for anyone with a bank account.

Dombrovskis is Europe’s top financial services official, so he controls bank regulations in the European Union.

He issued a stern warning to global bank regulators yesterday that he is prepared to reject any further plans they might have to tighten bank capital requirements.

This might sound rather dry, but it’s incredibly important.

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ETFs On The Cutline – Updated Through 10/13/2016

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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 254 (last week 280) 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 October 14, 2016

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ETF Tracker StatSheet

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https://theetfbully.com/2016/10/weekly-statsheet-for-the-etf-tracker-newsletter-updated-through-10132016/

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Market Commentary

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[Chart courtesy of MarketWatch.com]

1. Moving the Markets

The day started on a positive with the major indexes bouncing higher by some 0.75% supported by stronger than expected results in the financial arena. However, economic data points were negative across the board ranging from rising producer prices (the most since 2014), retail sales growth slumping to its weakest point in a year to consumer confidence crashing to 2-year lows.

Not helping matters was the problem child of the year, namely Deutsche Bank, after announcing that they will fire another 10,000 bankers bringing the total layoffs to about 20% of their workforce. This task will most likely take several years to accomplish making me wonder whether they will actually be around that long to reduce costs to that extend.

But, pulling the rug out under today’s early rally attempt was Fed chief Yellen’s unnerving commentary on the economy. In a speech to policymakers and academics, she laid out the scenario that “the US economic potential is slipping and may need aggressive steps to rebuild it.” That sounds to me like the Fed plans on being accommodative a while longer despite traders having priced in a 67% chance of a rate hike in December.

In the end, it’s all one big guessing game, and we will simply have to wait and see how things play out once the election soap opera has finally come to an end on November 8th.

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Weekly StatSheet For The ETF Tracker Newsletter – Updated Through 10/13/2016

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ETF Data updated through Thursday, October 13, 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

tti

Our main directional indicator, the Domestic Trend Tracking Index (TTI-green line in the above chart) remains above its long-term trend line (red) by +1.47% after having generated a new Domestic Buy signal effective 4/4/2016 as posted.

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Clawing Back

Ulli Market Commentary Contact

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[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Equities continued their downward trend following weak Chinese data but a turnaround in oil prices pulled the major indexes back up and limited the decline to -0.31% for the S&P 500.

The negative catalyst was Chinese exports falling 10% in September, which was far worse than expected while imports also shrank unexpectedly.

Adding to that is the continued uncertainty about the upcoming elections and the ever increasing mudslinging, which has turned this event into the most watched soap opera. This is the time to maintain a limited involvement along with a conservative exposure in the markets as sudden events could rock the boat severely.

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Fed Minutes Are A Non-Event

Ulli Market Commentary Contact

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[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Despite great anticipation, the Fed minutes turned out to be a dud, as the usual jawboning concluded with “policy makers judged a rate hike could be warranted ‘relatively soon,’ if the economy continues to strengthen.” Of course, I did not expect any changes prior to the election since the Fed is in support of the incumbent party.

On the other hand, a December hike is not a certain thing either, especially if job openings, Fed chief Yellen’s favorite market indicator, continue to plunge. Today’s report showed the August number of job openings tumbling by some 388k, which was the lowest in a year.

At day’s end, the major indexes went nowhere with the Dow and S&P slightly gaining while the Nasdaq retreated a tad. I expect this sideways trend to continue through the elections but would not be surprised if volatility picks up again, especially if a known systemic problem, such as Deutsche Bank, makes negative headlines again, which could affect market direction suddenly and without warning.

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