ETF/Mutual Fund Data updated through Thursday, July 7, 2016
If you are not familiar with some of the terminology used, please see the Glossary of Terms.
1. DOMESTIC EQUITY MUTUAL FUNDS/ETFs: BUY — since 4/4/2016
Our main directional indicator, the Domestic Trend Tracking Index (TTI-green line in above chart) remains above its long term trend line (red) by +1.88% after having generated a new Domestic Buy signal effective 4/4/2016 as posted.
1. Moving the Markets
Stocks on Wall Street ended mixed despite a solid report on employment and a big proposed deal in the food sector.
Paris-based Danone, maker of Dannon yogurt, agreed to acquire organic food provider WhiteWave Foods (WWAV) for $56.25 based on a valuation of 26x cash flow, which equates to an enterprise value of about $12.5 billion. The acquisition will double the size of Danone’s U.S. business. The stock gained 18.55% to close at $56.23 a share on the day. The transaction is expected to close by the end of the year and is subject to approval from regulators and WhiteWave’s shareholders.
In a sign that risk-aversion may be temporarily diminishing, the British pound was up nearly 0.7% vs. the dollar. But the price of a barrel of U.S.-produced crude got hammered -4.66% to $45.22. Crude took a hit after the government reported that U.S. crude inventories shrank less than expected in the past week.
Businesses added 172,000 jobs in June, said payroll processor ADP, in a sign that the government’s employment report may show at least a moderate rebound after two dreary showings.
Wall Street will be looking ahead to tomorrow’s June jobs report, which could shed light on the strength of the U.S. labor market following two straight months of disappointing job growth.
1. Moving the Markets
Stocks here in the U.S. brushed off early losses, despite a global sell-off, to end higher today. U.S. government bond yields bounced back from fresh record lows amid continued market turbulence following the surprise Brexit vote two weeks ago.
Yesterday and early today, it seemed that investors were reconsidering the implications of the British exit. Markets were sagging to say the least; however, the bulls turned their horns up mid-morning and the gains plowed forward in the afternoon after a release of the minutes from the Federal Reserve’s last policy meeting showed the central bank is in no hurry to raise interest rates. Translated, that means that low interest rates are here to stay for a long time, and markets are now encouraged to make new all-time highs possibly by next Tuesday. Of course, I am being facetious…
Fed officials did not provide a timetable for future increases, according to minutes of the Fed’s June 14-15 meeting. But they did indicate that their decisions could play out over “coming months” and that they must review a range of positive data before acting again.
U.S. crude oil also bounced back today, gaining 2.85% to close at $47.93 a barrel. Many analysts were speculating that crude would push (and stay) above the $50 a barrel mark during the summer months, but that has yet to happen.
1. Moving the Markets
Stocks departed from their post-Brexit bounce and ended lower to kick off the shortened week here in the U.S. It appears that even after a long Holiday weekend the Brexit event is still lingering in geopolitical and financial news. All three major indexes closed at least 0.60% lower on the day.
Early on in the day, the Bank of England reduced the capital requirements of banks in an effort to keep credit flowing in the U.K. and the British pound remained under pressure, hitting a fresh 31-year low vs. the U.S. dollar. The pound was trading down 1.35% Tuesday.
In another sign of risk-averse mentality in markets, U.S.-produced crude dropped 4.41% to close at $46.83 a barrel and gold, a perceived haven in uncertain times, was up $11.40 an ounce to $1,350.40.
This shall be an interesting week of trading as investors not only await updated economic info regarding June performance in major industries across the board but also eagerly follow the meltdown of the Italian banks.
By Peter SchiffJanet Yellen should send a note of congratulations to Nigel Farage and Boris Johnson, the British politicians most responsible for pushing the Brexit campaign to a successful conclusion. While she’s at it she should also send them some fruit baskets, flowers, Christmas cards, and a heartfelt “thank you.“ That’s because the successful Brexit vote, and the uncertainty and volatility it has introduced into the global markets, will provide the Federal Reserve with all the cover it could possibly want to hold off on rate increases in the United States without having to make the painful admission that domestic economic weakness remains the primary reason that it will continue to leave rates near zero.
For months the corner that the Fed has painted itself into has gotten smaller and smaller. It continues to say that rate hikes will be appropriate if the data suggests the economy is strong. Then its representatives continually cite (arguably bogus) statistics that suggest a strengthening economy, which cause many to speculate that rate hikes are indeed on the horizon. But then at the last minute the Fed conjures a temporary reason why it can’t raise rates “right now,” but stresses that they remain committed to doing so in the near future. But each time they conduct this pantomime, they lose credibility. Sadly, Fed officials are discovering that their supply of credibility is not infinite, even among those who would like to cut them a great deal of slack.
Below are the latest ETF Cutline reports, which show how far above or below their respective long-term trend lines (39 week SMA) my currently tracked ETFs/MFs are positioned.
The first report covers the ETF Master List from Thursday’s StatSheet and includes 381 ETFs, of which currently 306 (last week 234) are hovering in bullish territory.
The second report includes only High Volume ETFs. To clarify, High Volume (HV) ETFs are defined as those with an average daily volume of $10 million or higher. Volume figures can change in a hurry, so be sure to check first before investing.
These ETFs are generated from my selected list of 98 that I use in my advisor practice. It cuts out the “noise,” which simply means it eliminates those ETFs that I would never buy because of their volume limitations. 77 ETFs (last week 58) have managed to remain in bullish territory after the recent market volatility.
The third report covers Mutual Funds on the Cutline. There are currently 518 (last week 259) above the line and 262 below it out of the 780 that I follow.
Take a look:
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.