Dow Slides Again; Oil Closes Below $40 A Barrel

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

If you read yesterday’s commentary, you may remember me discussing the possibility that U.S. Crude oil could fall below $40 a barrel. Well, today it happened, which is completely opposite of how analysts were expecting the black gold to perform this summer. Many had pegged $50 per barrel as a mark that oil would surpass in the late summer months, but that has not been the case. Oversupply from Saudi Arabia, Iraq and the fact that the U.S. is increasing their rig count continues to be driving the price down and the time frame for when prices could turn upwards seems to get longer as each day passes.

In auto news, General Motors (GM) and Ford (F) posted U.S. sales declines in July, while Fiat Chrysler posted a small increase, as the U.S. automakers grapple with what appears to be a showroom plateau, albeit at record-high levels. Disappointed investors fled each automaker’s stock. Shares of both companies fell more than 4% on the day.

Europe contributed to part of the weakness in equities as the recent bank stress test was a total failure with the broad bank stock index now down some 7% from recent highs. Italian banks are hovering at records lows while behemoths like Deutsche Banks and Credit Suisse are being kicked out of the Stoxx 50 index as of this coming Monday. Right now, it appears that barring any sudden appearance of a suitor to bail out the European banking system, we may see more weakness in global equities.

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Mediocre Monday; Uber Hails Ride Back From China

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

U.S. stocks were mixed Monday as a two-week period of relative stability in the markets continued despite a sharp slide in oil prices.

In Uber news, we heard today that the company is officially “bowing out” of the China market. Uber’s Chinese operations will merge with Beijing-based ride hailing firm Didi Chuxing. Didi said in a statement it would take over all of Uber China and operate it as a separate brand. In exchange, the company said, Uber will receive a stake in Didi and Uber founder Travis Kalanick will join the Chinese company’s board. The deal is set to be worth about $35 billion.

Eyes moved sharply back to oil today, as the price of West Texas Intermediate (WTI) fell slightly below $40 mid-day. On Monday, the price of WTI, the U.S. benchmark, closed 3.7% lower, to $40.06 as traders remained concerned about a surplus of global supplies. In early May, many were speculating that prices would move (and stay) above $50 a barrel for the summer months. However, signs of increasing production and reduced geopolitical disruption have sent the commodity in an opposite direction this summer in what looks like a repeat of 2015. The last time it closed below $40 a barrel was April 18, when it settled at $39.78.

Of course, the divergence between WTI and the S&P 500 has grown to more extreme levels as ZH reports here with the following chart being a true eye opener. Take a look:

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One Man’s Opinion: Global Central Banks Are All-In: QE Running At Record $180 Billion Per Month (And Rising)

Ulli Market Review Contact

OneMan'sOpinionBy ZeroHedge

The monetary policy beatings will continue until morale improves. Eight long years after monetary policy experimentation went extreme, Reuters reports the amount of QE stimulus being pumped into the world financial system has never been higher… and it’s about to get bigger.

As Jamie McGeever reports, The European Central Bank and Bank of Japan are buying around $180 billion of assets a month, according to Deutsche Bank, a larger global total than at any point since 2009, even when the Federal Reserve’s QE programme was in full flow.

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ETFs/Mutual Funds On The Cutline – Updated Through 07/29/2016

Ulli ETFs on the Cutline Contact

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 538 ETFs, of which currently 473 (last week 506) 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. 86 ETFs (last week 81) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 736 (last week 730) above the line and 44 below it out of the 780 that I follow.

Take a look:

  1. ETF Master Cutline Report
  2. ETF High Volume Cutline Report
  3. MF 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/No Load Fund Tracker Newsletter For July 29, 2016

Ulli ETF Tracker Contact

ETF/No Load Fund Tracker StatSheet

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https://theetfbully.com/2016/07/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-07282016/

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Market Commentary

DOW FELL EVERY DAY THIS WEEK; GDP SHOCKER

Fri pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Can the GDP numbers get any worse? Today’s announcement was a real shocker as second quarter GDP clocked in at a miserable 1.0% against expectations of 2.6%. And, to add insult to injury, first quarter GDP was revised from an already poor 1.1% to just 0.8%. I can’t wait for next month’s revision.

On top of that, the economic numbers over the past few days showed nothing but negatives confirming that we are at best in “standstill” mode. Of course, in this new environment, a slowing economy, possibly on its way to a negative GDP within the next couple quarters or so, is a good thing for the stock market as it means that any feared Fed rate hikes in the near future are off the table for sure.

It confirms that we can count on more accommodation by the Fed, meaning stimulus and a reckless increase in debt, which will very likely continue to push equities further into bubble territory. I posted on several occasions, that artificial levitation of prices only goes so far before the entire house of cards comes crashing down. And when it does, you better have an exit strategy, because the longer stock prices and fundamentals disconnect, the worse the adjustment to fair value will be.

Next week, there are still a number of large companies set to report earnings, which could push the markets in either direction. Stocks remain quite reactionary to oil prices and the presidential campaign is tightening up and could have more and more impact on market movement.

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Weekly StatSheet For The ETF/No Load Fund Tracker Newsletter – Updated Through 07/28/2016

Ulli ETF StatSheet Contact

ETF/Mutual Fund Data updated through Thursday, July 28, 2016

TOC072116

If you are not familiar with some of the terminology used, please see the Glossary of Terms.

Important announcement: Please note that I am in process of expanding the ETF portion of the StatSheet to bring you a wider variety of High Volume ETFs. I will be discontinuing the mutual fund portion, which I have a featured as a courtesy only for many years. Times are changing and ETFs are the product of the future. To further assist those having to invest in mutual funds with their 401ks, I will post access to a “mutual fund to ETF converter.” This change is scheduled to take effect around the end of July.

 

1. DOMESTIC EQUITY MUTUAL FUNDS/ETFs: BUY — since 4/4/2016

TTI

Our main directional indicator, the Domestic Trend Tracking Index (TTI-green line in above chart) remains above its long term trend line (red) by +3.04% after having generated a new Domestic Buy signal effective 4/4/2016 as posted.

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