Horrific Economic Data = Higher Stock Prices

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Stocks remained in positive territory today, even after the weakest reading on the services sector of the economy in six years, as traders returned from the long holiday weekend. It seems that Wall Street is still digesting Friday’s August jobs report (which most investors say will keep the Federal Reserve from hiking interest rates later this month), however, it bared no exuberant motions in trading today. Given the horrific economic data points as of late which, in a normal market would have pushed the major indexes south, it’s become clear that the Fed is politically motivated to support the encumbent party by keeping the markets as elevated for as long as possible.

More and more investors are somewhat on edge amid a stock market that continues to hover near all-time highs but is trading at way above-average valuations. All three major U.S. stock indexes kicked off the week within 1% of their all-time highs hit in mid-August and there is no apparent “market moving” indication that the situation will change anytime soon. That is until a black swan event reverals the magnitude of the air pocket below.

In deal news today, we heard that Volkswagen intends to take a $256 million, or 16.6%, stake in Navistar International (NAV) in an effort to get exposure in the U.S. heavy-truck market. Navistar’s shares jumped more than 50%, while VW stock was off by about 8%. The deal includes technology sharing and joint purchasing and related cost savings, the companies said Tuesday. In addition, Bayer AG upped its offer for Monsanto for a second time to $127.50 per share, which would price any deal at close to $56 billion.

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One Man’s Opinion: Bank of Japan Prepares for Crash Triggered by Fed Tightening

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OneMan'sOpinionBy Wolf Richter, WOLF STREET

No central bank of a developed country equals the Bank of Japan in trying to manipulate the stock market up by buying equities. The BOJ has done this for years. With breath-taking ineffectiveness.

So on July 28, the BOJ announced another stock market pump-up scheme: it would nearly double its annual purchases of equity ETFs from about ¥3.3 trillion to ¥6 trillion ($60 billion).

Hedge funds and other speculators expected for the BOJ to instantly throw its weight around in the stock market, and hopes were riding high that the Nikkei would surge, or at least rise in a visible manner. Alas, on Friday in Tokyo, the Nikkei dropped to 16,361, down a smidgen from where it had been on July 28.

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ETFs On The Cutline – Updated Through 09/02/2016

Ulli ETFs on the Cutline Contact

Below please find the latest High Volume ETF 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 322 (last week 323) 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 September 2, 2016

Ulli ETF Tracker Contact

ETF Tracker StatSheet

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https://theetfbully.com/2016/09/weekly-statsheet-for-the-etf-tracker-newsletter-updated-through-09012016/

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Market Commentary

STOCKS INCH UP ON THE WEEK; SAMSUNG HEARS A PING

Fri pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

U.S. stocks ended higher Friday as traders examined a critical monthly report on job growth that could carry implications for Federal Reserve policy. The anticipated jobs report was particularly crucial because the Fed is closely examining economic data for guidance as it sets interest-rate policy.

The report estimated August growth of 151,000 jobs and the unemployment rate flat at 4.9%. On average, economists surveyed by Bloomberg were projecting growth of about 180,000 jobs in August and an unemployment rate of 4.8%. The top leader in jobs creation was Education and Health with 39,000 closely followed by Minimum wage food services and drinking places adding 34,000. Leading up to today’s jobs report were the worst 2 weeks for US Macro data in 6 months making a mockery of the alleged recovery and confirming that, other than saving face, there is no reason for the Fed to consider an interest rate hike.

In the world of smart phone tech, Samsung announced that it is going to have to recall 2.5 million units of its recently released Galaxy Note 7 smart phone. The announcement came after discovering batteries of some phones exploded while they were charging. While this incident may be a temporary headline, the company feels confident that its brand name will continue selling strong moving forward.

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Weekly StatSheet For The ETF Tracker Newsletter – Updated Through 09/01/2016

Ulli ETF StatSheet Contact

ETF Data updated through Thursday, September 1, 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 +2.78% after having generated a new Domestic Buy signal effective 4/4/2016 as posted.

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Drop And Pop

Ulli Market Commentary Contact

Thur pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

August was a quiet month for the U.S. stock market, with volatility at very low levels.  The S&P 500 did not see a day with a change of 1% in either direction the entire month. However, a six-month winning streak was snapped in August for the Dow and, as you may know, we could be in for a bumpy ride this month due to the fact that September has historically been one of the worst months for blue-chip stocks.

Stocks did post a slight gain today ahead though ahead of a key jobs report on deck for Friday that could give great insight regarding the Fed’s next move on interest rates. On Wednesday, payroll processor ADP reported that private employers created 177,000 new jobs last month, topping forecasts by 2,000. That solid number could suggest a strong government employment report tomorrow with very likely the record being set for new part-time bartender and waitress jobs.

U.S. auto sales cooled off in August, which might be signaling that the industry may not break last year’s all-time record, despite a strong first half of the year. The auto industry has been hovering near 2015’s record pace of 17.5 million vehicles, fueled by allegedly strong employment, low gasoline prices and a solid housing market. Or, you could be more realistic and give credit to strong auto sales thanks to not only record subprime financing but also for periods up to 10 years.

And in big box retail, Walmart (WMT) announced today that it plans to shed about 7,000 store accounting and invoicing positions as the company moves to automate those processes. The company confirmed though that workers will be offered positions elsewhere in their stores.

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