Edging Up On Low Volume

Ulli Market Commentary Contact

tue-pic

[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

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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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Weekly StatSheet For The ETF Tracker Newsletter – Updated Through 12/22/2016

Ulli ETF StatSheet Contact

ETF Data updated through Wednesday, December 22, 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

ttiClick 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 +1.24% after having generated a new Domestic Buy signal effective 4/4/2016 as posted.

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Dow 20,000 Still In Sight

Ulli Market Commentary Contact

thur-pic

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

The major indexes never managed to crawl above the unchanged line during today’s session in part caused by weakness in retailers. Stocks fell after reports that Trump’s transition team is mulling over a possible 10% tariff on imports with the Consumer Discretionaries losing over 1% for the day, their largest one-day decline since October.

We have reached a point in the markets where the post-election gains seem to have made them very expensive considering that all is based on hype and hope. What happens if Congress ends up not just watering down some of Trump’s ideas but rejects others outright?

To be realistic, we really need to see first what will actually get passed before these recent gains can be justified. Speaking of those gains, they were not broad based when looking at it from a global basis, but more focused on U.S. equities while bonds, at the same time, got hammered. The following chart makes this abundantly clear:

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