Weekly StatSheet For The ETF Tracker Newsletter – Updated Through 10/27/2016

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ETF Data updated through Thursday, October 27, 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 +0.94% after having generated a new Domestic Buy signal effective 4/4/2016 as posted.

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Equities Dip As Interest Rates Spike

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thur-pic

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

Finally, at least for one day, stocks and bonds were correlated again, something we have not seen in a while, and this may be a harbinger of things to come. Bond prices dropped as yields rose and stocks headed south early on, recovered mid-day, but the rally faded into the close leaving the S&P 500 with a -0.30% loss.

Earnings reports turned this session into a choppy and sloppy one with the Healthcare index showing strength while the real estate sector got clobbered and lost -2.5%, its worst decline in some 6 weeks.

After the close, Google rose 2% while heavyweight Amazon tumbled more than 6% after disappointing quarterly results. On deck tomorrow is the always highly anticipated jobs report, which can move markets in either direction.

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Oil Leads Equities With Pump-And-Dump Theme

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wed-pic

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

Equities started the day on a weak note when oil prices suddenly got pumped to touch the $50/barrel point before being dumped and ending the day down -1.62%. The S&P 500 followed suit but managed to limit its losses to a meager -0.17%.

Apple weighed on the overall market and closed down -2.25% as earnings in general did not bring any surprises, except for Boeing, which lifted the Dow by gaining +4.7%. Still, anxiety exists as earnings season continues and Wall Street looks towards Friday’s jobs report as well as the upcoming elections.

As has been the case lately, the worst performing sector was again Healthcare. Since that is a sector featured in my Spotlight ETFs below, you will have noticed that XLV has been in “Sell” mode for some time and has also broken below its respective trend line by -2.24%, which indicates that it is firmly entrenched in bear market territory. If you still own it, you haven’t been paying attention.

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Earnings Data Wipe Out Yesterday’s Gains

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tue-pic

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

After a weak opening, the S&P 500 managed to kiss the unchanged line, but it was all downhill from there as stocks slipped from their 2-week highs made yesterday. Not helping matters was the dying Consumer Confidence bounce with the indicator sporting its biggest plunge in 11 months.

The US dollar continued its spike upwards supported in part by ever increasing interest rate hike odds, which now have topped 70%. While that may spell trouble for equities in the months ahead, a neutralizing factor could be a continued voracious appetite for stocks, a least for the time being.

Globally, economic weakness prevails as bellwether Caterpillar seems to confirm month after month. They have now failed for 46 consecutive months to post a retail sales increase. They again missed not only revenues but also slashed full year guidance. But then again, none of these realities matter to the markets as long as we can count on or hope for further Central Bank accommodative policies.

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Earnings And Acquisitions Support The Indexes

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mon-pic

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

The S&P touched a two-week high as acquisitions and mergers confirmed to some that, despite hugely elevated market levels, untapped value still exists, although that is clearly in the eye of the beholder.

Expected annualized earnings are supposed to have been risen 1.1% last quarter, which is an improvement after four quarters of contraction. On one hand, this is a positive, however, on the other one also has to look at the fact that the major indexes hovering at extremely high levels, thanks to the Fed’s easy monetary policy, and are already evaluated way higher than underlying economic data would warrant. So, how much upside is left?

A potential fly in the ointment was the crash of China’s currency to all-time lows. When that has happened in the past, as in August 2015 and January 2016, stock markets have followed south and gone into meltdown mode. Will it happen again? Since no one has the answer, we’ll have to wait and see how that theme plays out and if there will be a fallout effect prior to the US election.

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One Man’s Opinion: The Chart That Gives Citi “The Chills”

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OneMan'sOpinionBy ZeroHedge

Two weeks ago, HSBC’s Murray Gunn warned of “ominous signs” exuding from the US equity markets. This weekend, Citi’s Tom Fitzpatrick confirmed the concerns exclaiming Travolta-esque “[we’ve] got chills [about the market], and they’re multiplying… and they’re losing control.”

While fully realizing that you can find a lot of similar overlays if you look hard enough…this one gives us “the chills”.

At a time when we have seen:

– Elevated concerns about Europe and its banks (possibly even creating some US/Europe conflict)

– The most polarizing US Presidential election in modern times

– Increased “taper talk” emanating from Japan and Europe and rising concerns about the efficacy of the Central bank policy around the World and the possibility it becomes unhinged.

– A 20 basis point move in US 10 year yields in 5 days;

– A 16% move in Oil in 7 days;

– A $90 move in Gold in 9 days;

– A chart on USDCNY that looks to be breaking to the topside and a huge GBPUSD move overnight in minutes

Is this the next shoe to drop?

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