ETF Tracker Newsletter For September 30, 2016

Ulli ETF Tracker Contact

ETF Tracker StatSheet

————————————————————-

https://theetfbully.com/2016/09/weekly-statsheet-for-the-etf-tracker-newsletter-updated-through-09292016/

————————————————————

Market Commentary

A RUMOR SAVES THE WEEK

fri-pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

I had to laugh out loud this morning when I saw the markets rallying predominantly supported by a rumor that Deutsche Bank (DB) is close to a $5.4 billion settlement with the US Justice Department (DOJ) as confirmed by the French Press (AFP). Recall that the “opening bid” was a penalty of over $14 billion a few weeks ago. That reduction served not only as the catalyst to pull DB’s stock price out of the basement for a gain of 14% but also supported the entire US equity market.

It’s laughable if we are to assume/believe that with this “discount” all of DB’s problems are resolved and the world’s most systemically dangerous bank no longer presents a threat to the banking system. To me, it looked more like a last minute assist by AFP to calm things down as Deutsche was facing severe outflows of cash while credit default swaps were soaring.

Monday is a banking holiday in Germany but depending on any further announcements by the DOJ over the weekend, or lack thereof, perception of reality may shift and cause another sell-off.

With Fed chief Yellen entertaining the possibility of the Fed potentially buying equities to keep markets propped up, none other than CNBC’s Rick Santelli resorted to 3 minutes of hard hitting truth by spilling his guts in this epic rant. It’s worth viewing.

Read More

Weekly StatSheet For The ETF Tracker Newsletter – Updated Through 09/29/2016

Ulli ETF StatSheet Contact

ETF Data updated through Thursday, September 28, 2016

TOC082516

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 +2.22% after having generated a new Domestic Buy signal effective 4/4/2016 as posted.

Read More

Markets Get Hit By Deutsche Bank Concerns; Amazon Getting Intelligent

Ulli Market Commentary Contact

thur-pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Stocks ended lower today after reports surfaced that some hedge funds were cutting their exposure to Germany’s Deutsche Bank (DB), a move which raised fears that some clients are leery about doing business with the European banking giant. Did a bank run begin? While it’s too early to tell, the denial by DB’s John Cryan about needing more capital and an even more furious denial by ECB’s Draghi that low rates are partly to blame, as well as Chancellor Merkel’s remarks that a government bailout is not in the cards, are sure signs that more trouble is brewing and the pain is spreading.

Some rumors buzzing hint that the swift selloff on Wall Street today signals investor nervousness eight years after the bankruptcy of Wall Street titan Lehman Brothers. If the reports of hedge funds moving money out of Deutsche Bank are true, it may suggest that investors don’t want to put their own cash at risk in the event Deutsche Bank’s problems worsen.

A bit of interesting news on the artificial intelligence front, today, we heard that Amazon (AMZN) is offering $1 million to the university team that builds an artificial intelligence that can keep up its side of the conversation with a human being for 20 minutes. To aid the endeavor, up to ten teams will get a $100,000 stipend from Amazon along with Alexa-enabled devices, free cloud computing and support from Amazon’s Alexa team. Just something to keep an eye on in the future.

Read More

Heading Higher

Ulli Market Commentary Contact

wed-pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

After an early drop, the markets recovered and managed to close in the green in part due to quarterly window dressing. Oil shifted into high gear and gained some 4.6% on renewed Saudi jawboning about future production limits.

The spot on article “This market calm feels like mayhem” by ZH, points to anxieties by investors, which I summarized as follows:

  • This is the most difficult, treacherous and damnable investing environment there’s ever been.

  • The market is in a dangerous bubble; now let’s talk about the following stocks you just have to chase because they’re cheap.

  • We all know there are bubbles galore. That’s called received monetary policy wisdom. And every time they assure in speech or testimony that an end is conceivable something conspires to pull them back in.

  • The latest policy maker “do as I do, rather than say” was caused by today’s eyebrow-raising decision by the BOJ to follow last week’s big discussion on steeper yield curves with a business-as-usual purchase of super-long Japanese Government Bonds.

  • We know the prices of most assets are hopelessly distorted, yet prudence has had a very high price.

  • For too long a time, traders got by figuring they could front-run (trust) quantitative easing and disregard the rest. That game is getting long in the tooth as monetary policy runs out of gas and policy-makers are trying, unsuccessfully, to play it by ear. But what to do in response?

  • No one knows and, as a result, a lot of important assets are confusingly and maddeningly trapped in tight, uninformative ranges. No one wants to buy, no one can afford to sell and nobody’s happy.

  • The only things moving are sideshows like Mexican peso, which have nothing to do with the global economy.

Given these uncertainties, I have to point out again the importance of using a sell stop discipline, because when this house of cards falls, things can get very ugly very fast.

Read More

Markets React Well To Debate

Ulli Uncategorized Contact

tue-pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Stocks rallied following the first presidential debate, as investors digest the first face-off between Hillary and Donald. Stocks broke a two-day losing streak in the first trading session following the first of three face-to-face battles between the Democratic and Republican nominees for president, which some are suggesting that markets are giving the first-debate victory to Clinton. During the debate, candidates sparred over trade policies, taxes, national security and other key issues.

Equities were also reacting to decent news on consumer confidence. We heard today that the consumer confidence index for September jumped to a nine-year high of 104.1, which was better than August’s 101.8 reading.

In energy, U.S. Crude Oil prices tumbled after comments from Iran and after Saudi Arabia officials downplayed expectations of a possible oil production deal. Benchmark U.S. crude fell 3.3% to $44.42 a barrel. Crude was also hurt by a Goldman Sachs price downgrade. The Wall Street bank slashed its fourth-quarter oil-price forecast to $43 a barrel from $50 a barrel.

Deutsche Bank (DB) was in the news again as its stock tumbled towards the single digits but managed to close slightly in the green. DB is considered by some to be the “most systematically dangerous bank in the world.” As I said yesterday, “when,” not “if” it fails, the implications will be far reaching. This will not end well.

Read More

Nervousness Prevails Before Debate; Deutsche Bank Clobbers US Financials

Ulli Market Commentary Contact

mon-pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

While a general unease about tonight’s debate kept the major indexes in negative territory all day, other bad news contributed to the weakness as well. New home sales tumbled with prices touching lows not see in some 2 years while the supply of homes rose to 4.6 months from 4.2 months when using the current rate of sales.

Then there was Deutsche Bank. I have repeatedly posted that either Deutsche Bank or the Italian banking system may be the “canary in the coalmine” contributing to a “re-set” in asset prices should either one implode. At least for the day, it was Deutsche’s turn to put lipstick on that pig by “managing news flow” in the most positive way possible.

Nevertheless, its stock price made an all-time low, not just down over 7% on the day but also down 16% since the middle of September, and in great jeopardy of going into single digits.

Why is that such a big deal? Mainly because Deutsche has the largest derivatives book in the world with over $50 trillion; if they run into financial difficulties every banking system in the world will be affected.  Looking at a stock price comparison between Deutsche and Lehman Bothers, who ushered in the last financial crisis, you will find the similarities amazing:

Read More