Weekly StatSheet For The ETF Tracker Newsletter – Updated Through 08/25/2016

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ETF Data updated through Thursday, August 25, 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 +2.88% after having generated a new Domestic Buy signal effective 4/4/2016 as posted.

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Laying In Waiting For Yellen Speech

Ulli Market Commentary Contact

Thur pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Heading into Thursday’s trading session, all three major U.S. stock indexes were less than 1% below their record closing highs.  Equities dipped slightly lower today though ahead of another much anticipated speech due from Janet Yellen tomorrow in Jackson Hole, WY. Many believe that Yellen wants to avoid market turbulence, so a surprise policy shift toward a sooner-than-expected rate hike is unlikely.

As usual, the speech is being chalked up as must-see TV, but Federal Reserve chair Janet Yellen’s address Friday may not offer many (or even any) surprises at all.  Yellen is expected to outline what “tools” the Fed has to fight the next battle or crisis that may come up as it comes to grips with the new world of slow growth and low rates. However, no matter how much lipstick you want to put on that pig, the only “tool” the Fed has at its disposal is to create more debt no matter what they call it. That’s it!

On the individual stock front, shares of drug maker Mylan (MYL) were up in early trading after the company responded to the controversy surrounding a sharp price hike on its EpiPen by offering consumers a rebate in the form of a savings coupon that the company says will cut the cost of the drug in half.  Shares pulled back late in the day low and closed down about 0.8%.

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Major Indexes Pressured By Economic News

Ulli Market Commentary Contact

Wed pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Time flies by, as we all know. It was almost a year ago that stocks plunged amid worries regarding falling oil prices and the uncertainty about China’s economic growth.  Well, a year has passed and not much has changed.  The price of oil remains under $50 per barrel and China’s growth continues to slow.

At the moment, there is not a lot of market-moving info to get investors excited.  Q2 earnings season (which better than expected, despite the S&P 500 suffering its fourth straight quarter of negative profit growth) is winding down.  And there was only one key economic data point released today: Existing home sales, which disappointed, with sales down 3.2% in July to an annualized rate of 5.39 million. Economists were expecting sales at an annual rate of 5.5 million units, down from 5.57 million units in June.

Precious metals had a rough morning when one of the big players, possibly in need of raising cash, dumped $1.5 billion of gold futures contracts within a 10 minute period, which took the starch out of any upward momentum. Silver and gold miners joined in the misery and closed lower as well.

Wall Street is eagerly awaiting a key speech on monetary policy by Fed Chair Yellen on Friday at a closely watched central bankers meeting in Jackson Hole, Wyoming.  Investors will be listening to any clues from Yellen regarding the timing of the next interest rate hike.

The Fed last hiked rates back in December, which was their first rate increase in nearly a decade and moved rates off of zero. Will the jawboning be just that or will an actual decision be made? My guess is that based on economic realities, the Fed is stuck between a rock and a hard place and can’t afford even a meager 0.25% rate hike.

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NASDAQ Ekes Out A New High

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Tue pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

U.S. stocks rose Tuesday and moved back into record territory as the Nasdaq set a new all-time high by gaining a meager +0.30%.  The rebound comes as quiet summer trading drags on and investors look ahead to a key speech from Federal Reserve chair Janet Yellen on Friday.

Investors are largely in wait-and-see mode ahead of Yellen’s speech on Friday in Jackson Hole, Wyoming, which allegedly will clarify the U.S. Central Bank’s thinking on whether it plans to hike interest rates for the first time this year at its September meeting or continue to hold off.

In the earnings world, it was all about Best Buy (BBY) today. Investors piled into the stock after the big-box chain soared past expectations on earnings and profit, potentially scrambling the conventional wisdom on the outlook for electronics sales. The gains came primarily in consumer electronics and appliances, which posted same-store sales increases of 4% and 8.2%, respectively.

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Mediocre Monday Meddling

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Q2 earnings season has all but wrapped up, now that retailer Walmart (WMT) has reported its results. The theme remains that investors are somewhat pleased the dip in profit growth by companies in the S&P 500 was less than expected. Companies within the index reported 2.1% lower adjusted profit per share, which was somewhat better than the 5% expected profit drop. A side note of something to consider, however, is that it’s the fourth consecutive drop in quarterly earnings growth for the S&P.

In Fed news, Janet Yellen will speak on Friday about the central bank’s long-term policy framework. Before then, reports on home sales, orders of long-lasting goods and the U.S. trade balance will hold the spotlight in this week’s economic news.

In energy news today, we heard a report that Asia’s biggest economy (China) is well on its way to becoming the world’s second-largest producer of natural gas.  China’s oil and gas majors are suffering not just from low oil prices but also from mature fields, many of them nearing depletion. However, its energy needs are not declining, and the country is still the world’s top energy consumer, with consumption 30% higher than that of the U.S.

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One Man’s Opinion: Secret Federal Reserve Minutes Leaked

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OneMan'sOpinionBy Simon Black

Yesterday (last Wednesday) the Federal Reserve released the minutes from its July meeting a few weeks ago in which they decided to NOT raise interest rates.

These minutes are the official archive of the meeting, providing details about the presentations, debates, and discussions that took place.

They contain very formal sounding language, referring to their near-zero interest rates as “accommodation” in the same way that my high school health teacher preferred to use the more clinical term “copulation” instead of “sex”.

As an example, the most recent Fed minutes state:

“members agreed to indicate that they would continue to closely monitor global economic and financial developments.”

What in the world does that even mean?

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