Treading Water

Ulli Market Commentary Contact

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

Quiet holiday trading took over with the major indexes vacillating slightly above and below their respective trend line without clear direction and again on low volume. The exception was gold, which finished a 5-day winning streak by adding a solid +1.59% for the day.

The dollar gave back some of its recent gains and surrendered -0.52%, which was its strongest pullback since November 1st. Interest rates dropped with the 10-year Treasury now yielding 2.49% down from 2.6% early in December.

Oil slipped on a rise in inventories, weekly jobless claims fell and the preliminary reading for the trade deficit unexpectedly widened. There is only one trading day left this year for the Dow to reach the much anticipated and talked about 20k level, but right now that goal remains elusive.

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Rally Loses Steam As The Drive For Dow 20,000 Stalls

Ulli Market Commentary Contact

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

A broad decline in the major indexes interrupted the Trump rally as bad news was, for a change, perceived to be really bad news with the culprit being a drop in home sales. It was a sharp one as pending home sales plunged to their lowest level in almost a year. This should come as no surprise as the upswing in mortgage rates and not enough housing inventory kept potential buyers subdued.

If you look at the numbers on a year over year basis, the drop was the worst since August 2014 with only the Northeast seeing pending sales gains on both, an annual and monthly basis. NAR’s chief economist Lawrence Yun put it this way: “Already faced with minimal listings in the affordable price range, fewer home shoppers in most of the country were successfully able to sign a contract.”

Expect much more pain for housing, which as Mark Hanson noted recently is the least affordable it has ever been for buyers who need a mortgage in the coming months, which will promptly spill over into all other areas of the economy. In the meantime, the eagerly awaited Dow 20,000 remains out of reach.

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Edging Up On Low Volume

Ulli Market Commentary Contact

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

The major indexes managed to crawl higher today but hopes of the Dow taking out the 20,000 marker were dashed again with the index barely remaining above the unchanged line. For December 27th, today was the lowest volume day in over 10 years, which will most likely continue for the remainder of this week.

Consumer confidence went parabolic and shot up to its highest in more than 15 years, which is hard to believe considering the weak underlying fundamentals. But, then again it’s all based on hope that business conditions will strengthen in the future based on Trump’s infrastructure spending plan along with lower taxes and deregulation. Makes me wonder what might happen should the bloom fall off this flower unexpectedly…

In corporate news, Amazon reported that it shipped an amazing 1 billion items worldwide this holiday season calling it the best year they ever had.

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One Man’s Opinion: Foreigners are Dumping US Treasurys as Never Before

Ulli Market Review Contact

OneMan'sOpinionBy Wolf Richter

All kinds of things are now happening in the world of bonds that haven’t happened before. For example, authorities in China today halted trading for the first time ever in futures contracts of government bonds, after prices had swooned, with the 10-year yield hitting 3.4%. Trading didn’t resume until after the People’s Bank of China injected $22 billion into the short-term money market.

What does this turmoil have to do with US Treasuries? China has been dumping them to stave off problems in its own house….

The US Treasury Department released its Treasury International Capital data for October, and what it said about the dynamics of Treasury securities is a doozie of historic proportions.

Net “acquisitions” of Treasury bonds & notes by “private” investors amounted to a negative $18.3 billion in October, according to the TIC data. In other words, “private” foreign investors sold $18.3 billion more than they bought. And “official” foreign investors, which include central banks, dumped a net $45.3 billion in Treasury bonds and notes. Combined, they unloaded $63.5 billion in October.

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ETFs On The Cutline – Updated Through 12/23/2016

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 191 (last week 206) 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 23, 2016

Ulli ETF Tracker Contact

ETF Tracker StatSheet

https://theetfbully.com/2016/12/weekly-statsheet-for-the-etf-tracker-newsletter-updated-through-12222016/

Market Commentary

Wall Street Takes A Breather

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

The major indexes moved in a tight trading range today and for most of the week with the S&P 500 adding 6 points over the past 5 trading sessions.

I found today’s two economic data points more confusing than clarifying:

There is an odd divergence in the latest UMichigan consumer sentiment print: on one hand, the December index of Consumer Sentiment rose from 93.8 in November to 98.2, up from the preliminary 98.0 print, even as long-term inflation expectation, those in the 5-10 year bucket, dropped from 2.50% to 2.30%,a new all time low print.

 hich is odd, because the very reason for the surge in confidence is due to the recent spike in the market, driven higher by expectations or rising inflation, something which apparently has not filtered through to ordinary US consumers, who instead are hoping to have their Dow Jones 20,000 hat, while basking in the glow of dropping prices and a “deflationary mindset.”

And then this:

Soaring homebuilder confidence, crashing mortgage applications, spiking mortgage rates, weak pending home sales, strong existing home sales, and now new home sales for November surged 5.2% MoM (smashing expectation of a 2.1% rise). Take your pick of the US housing ‘recovery’ narrative.

The effect on the markets was non-existent with most traders having already left for the holiday leaving only the surprisingly subdued algos in charge.

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