One Man’s Opinion: Lather. Rinse. Repeat.

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ManSubmitted by Peter Schiff via Euro Pacific Capital,

Stop me if you’ve heard this one before: A Fed official walks into a bar and says the economy is improving and rate hikes are appropriate. The patrons order another round to celebrate. Then disappointing data comes out, the high fives stop, and the Fed official ducks out the back…only to come back the next day saying the same thing. Anyone who pays even the smallest attention to the financial media has experienced versions of this joke dozens of times. Yet every time the gag gets underway, we raise our glasses and expect the punch line to be different. But it never is. Last week was just the latest re-telling.

For nearly a month the Fed’s bullish statements stoked optimism on the economy and raised expectations, based particularly on the most recent FOMC minutes, for a summer rate hike. But these hopes were dashed by the May non-farm payroll report, which reported the creation of only 38,000 jobs in May, the worst monthly performance in six years, based on data from the Bureau of Labor Statistics (BLS). The number missed Wall Street’s estimate by a staggering 120,000 jobs. If not for the 37,000 downward revision reported for April (160,000 jobs down to 123,000), May could have shown a contraction. This would have constituted a major black eye to the Obama Administration’s favorite talking point that its policies have led to 75 months of continuous job gains. (6/3/16, Democratic Policy & Communications Center).

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ETFs/Mutual Funds On The Cutline – Updated Through 06/24/2016

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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 234 (last week 284) 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. 58 ETFs (last week 67) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 259 (last week 417) above the line and 521 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 June 24, 2016

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ETF/No Load Fund Tracker StatSheet

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https://theetfbully.com/2016/06/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-06232016/

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Market Commentary

BREXIT SHATTERS COMPLACENCY—THE MORNING AFTER

Fri pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

What a difference a day makes. There we were closing in on all-time new highs on the S&P 500 on Thursday and just one day later, we’re heading the other direction in a big way with the U.S. stock market suffering its worst drop in 10 months. The British decided via their referendum to leave the European Union, which was won 52% to 48% in favor of the “Leave” folks. Good for them as they now will be able again to make independent decisions about their country without the mandatory input of their EU overlords.

Worldwide, equities got spanked with the most damage being done to the Nikkei and the various European indexes. Domestically, the major indexes went south as well, but to a lesser degree as the table above shows. King of the hill was gold and gold miners, which rallied +4.62% and +5.91% respectively.

Sure, it looks like the Fed’s plan of raising interest rates this year has gone out the window and not just because of the Brexit result but also due to ever sliding economic data points, which makes an eventual rate cut far more likely than a hike.

The big question is: Will there be more selling ahead? It’s certainly a possibility as some big investors using leverage are bound to get some margin calls, which may push markets lower along with continued fears of more fallout from the EU as other counties appear to be waiting on deck ready for their own version of Brexit.

Of course, there are always dip buyers out there looking to catch the falling knife hoping for a rebound. However, as trend followers, we don’t concern ourselves with these issues but are watching the major trends as identified by our Trend Tracking Indexes (TTIs). Both have been affected, and you can read the details in section 3 below.

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Weekly StatSheet For The ETF/No Load Fund Tracker Newsletter – Updated Through 06/23/2016

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ETF/Mutual Fund Data updated through Thursday, June 23, 2016

TOC060916

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

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 +2.03% after having generated a new Domestic Buy signal effective 4/4/2016 as posted.

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Front Running the Brexit Vote

Ulli Market Commentary Contact

Thur pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

U.S. and European stocks rallied big time as investors appear to be front running or betting that voters in the U.K. will choose to remain in the European Union. Ahead of the vote, a new Ipsos Mori poll completed Wednesday night showed the “remain” supporters with a narrow lead — 52% to 48%. But the polling firm’s chief executive said 13% of those polled could change their minds.

With the HFT traders dominating market action, I would not read too much into this move as volume was utterly atrocious. On the other hand, things like lack of volume or slowing worldwide economies with ever increasing debt loads no longer matter in this run towards new all-time highs, until… one day… they do. Then, watch out below…

What investors do know, based on market action leading up to the closely watched vote, is that a vote by Britain to exit the E.U. – the feared Brexit – would deliver a bearish blow to so-called risk assets, which include stocks.

We also heard today that Bank of America (BAC), the nation’s largest bank, has agreed to pay $430 million in settlements for violations of regulatory rules that safeguard customer funds. Apparently, the bank misused brokerage customers’ cash from 2009 to 2012 to finance its own trading and generate profits, the SEC said. This is a reminder to always read disclosures thoroughly; I am sure everybody does.

Lastly, news came in that German automaker Volkswagen Group is expected to deliver a $10 billion settlement to cover government fines and compensate owners of vehicles fitted with software that cheated emissions standards, according to multiple reports.

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Major Indexes Pull Back Ahead Of Brexit Vote

Ulli Market Commentary Contact

Wed pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

An early rally, fueled by better than expected May home resales, fizzled out in the afternoon as Wall Street focused on the vagaries and uncertainties of tomorrow’s referendum on whether Great Britain will exit the European Union.

A poll published today shows pretty much a statistical tie with “Leave” supporters at 45%, which is just one percent ahead of the “Remain” folks, while 9% are undecided.

Should “Leave” prevail, I expect to see some fireworks in the European markets with a spillover effect to the U.S. Conversely, if “Remain” prevails, equities are bound to engage in a relief rally; the question in my mind is: Will it last or simply be a dead cat bounce?

Janet Yellen continued her congressional testimony for the second day. It pretty much was a repeat of yesterday with the usual jawboning that a recession is not likely but that the British vote and a slowing in U.S. hiring “pose risks to the economic outlook.”

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