One Man’s Opinion: Legendary Investor Asher Edelman Says “I Have No Doubt” PPT Behind Market Rally

By ZeroHedge

Legendary vulture investor Asher Edelman, the 1980s model for Gordon Gekko, strayed into what must’ve been uncomfortable territory for CNBC during an appearance on “Smart Money” when he discussed his view that the government’s “plunge protection team” is the only thing propping up the current market rally, and said he suspects that it has again been recently een intervening in the market to keep stocks at record highs.

Edelman simply notes that he doesn’t want to be in the markets right now because “I don’t know when the plug is going to be pulled.”

Few can explain the market’s recent resilience, holding near record highs despite weak economic data and intensifying geopolitical tensions. The main benchmarks have risen for the fourth straight day following last week’s “Trump Dump” despite a terror attack in the U.K., the worst soft economic data since February 2016, and surprisingly low trading volume.

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ETFs On The Cutline – Updated Through 05/26/2017

Below please find the latest High Volume ETFs 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 273 (last week 264) are hovering in bullish territory. The yellow line separates those ETFs that are positioned above their trend line (%M/A) 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.

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ETF Tracker Newsletter For May 26, 2017

ETF Tracker StatSheet

http://www.theetfbully.com/2017/05/weekly-statsheet-etf-tracker-newsletter-updated-05252017/

PUSHING HIGHER

[Chart courtesy of MarketWatch.com]

  1. Moving the Markets

Despite treading water all day, the S&P 500 and Nasdaq managed to crawl slightly above the unchanged line, thanks to a last minute levitation, thereby closing at another all-time high. Today’s assist came from a rise in consumer discretionary stocks like Best Buy (BBY), which pulled back a little today after adding +21.5% on Thursday.  Even oil showed some signs of life after yesterday’s drubbing by gaining +1.80%.

Today’s gains, although tiny, had nothing to do with improving fundamentals, which still leave a lot to be desired of, to say it mildly. Case in point is the US Macro data index, which now has fallen to 15-month lows, as well as the Nasdaq Composite, the Earnings Expectations of which have slumped to 2017 lows; but, none of these data points matter, until one day when they do.

CitiBank came out forecasting that a close today above 2,405 on the S&P 500 suggests we can rally towards 2,500+ in the coming weeks. While that is a positive prediction, I prefer not to guess but to use my Domestic Trend Tracking Index (TTI) for directional guidance. The TTI is currently deeply entrenched on the bullish side (see section 3), and we will follow its trend until it either ends or our trailing sell stop points give the signal to exit.

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Weekly StatSheet For The ETF Tracker Newsletter – Updated Through 05/25/2017

ETF Data updated through Thursday, May 25, 2017

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

Click on chart to enlarge

Our main directional indicator, the Domestic Trend Tracking Index (TTI-green line in the above chart) is positioned above its long-term trend line (red) by +3.78% after having generated a new Domestic Buy signal effective 4/4/2016 as posted.

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S&P 500 And Nasdaq Eke Out New Record Highs

[Chart courtesy of MarketWatch.com]

  1. Moving the Markets

After the break through the glass ceiling yesterday, the major indexes managed to maintain upward momentum to score gains for the 6th consecutive day recovering all losses sustained during last week’s dump. While the Dow lagged, the S&P and Nasdaq shot up into record territory.

Stocks still felt good the morning after digesting the Fed minutes, disregarding the warnings, and focusing on the hope that Fed members are basically in agreement that there will be a “very gradual and thoughtful balance sheet normalization process.” Some good earnings gave an assist as well.

All this good mojo was enough to push equities higher, which helped traders to simply ignore some bad news, namely that crude oil got spanked at the tune of -5.16% pushing the black gold solidly below the psychologically important $50 level to close at $48.71.

With so much green on the board, bonds joined in and rallied with the 20-year Treasury TLT gaining a tad. The US dollar showed signs of life again with UUP adding +0.12%, and precious metals closed higher as well. Even the VIX, which usually moves opposite of the S&P 500, decided it must be opposite day and edged higher.

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Last Hour Surge Pushes Indexes To Record Highs

[Chart courtesy of MarketWatch.com]

  1. Moving the Markets

I’ve been mentioning the glass ceiling during recent posts, and today was the day when the S&P 500 managed to break out of a 4-day sideways pattern to close the session at a new record but only by a tiny margin while setting a 2017 volume low.

Most of the day was spent treading water as traders awaited the minutes from the last FOMC meeting, which indicated broad agreement on plans to begin shrinking the Fed’s balance sheet and also remain on target to ‘perhaps’ hike rates next month.

Things got really nutty in the markets, when the Fed said:

Asset valuation pressures in some markets were notable…vulnerabilities appeared to have increased for asset valuation pressures…a sharp decline in such valuations could pose risks to financial stability.”

A very clear message, but the markets took it as a positive (huh?), and the S&P and Nasdaq went on set new record highs. Sometimes you just have to laugh…

The US dollar hit the skids again after yesterday’s rebound with UUP slipping -0.32%. Treasury yields fell with the 20-year bond TLT gaining +0.56% joined by gold and silver, which both closed in the green.

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