Continuing The Upward Path

[Chart courtesy of MarketWatch.com]

  1. Moving the Markets

Friday’s strong rebound continued today although at a lesser pace. Nevertheless, the major indexes rose in unison as Wall Street traders kept the prospect for the tax cuts and corporate earnings in focus. Despite political upheaval in Germany, caused by Chancellor Merkel not being able to form a coalition government, equities on both sides of the Atlantic were not affected.

Our ETF portfolios performed better than the major averages thanks to nice advances in Semiconductors (SMH +1.21%), Aerospace & Defense (ITA +0.83%) and US SmallCaps (SCHA +0.61%). The gains were solid across the board with no red numbers in sight.

Interest rates rose with the yield on the 10-year bond adding 2 basis points to end the session at 2.37%. Last week’s volatility in the High Yield sector slowed down with HYG losing a tiny -0.04%. Oil dropped and gold got hammered early on as someone decided to dump a huge amount of futures contracts in an obvious attempt to stop gold from reclaiming its $1,300 level. The drop was almost $20, which caused a break below the 50- and 100-day M/As.

With the Euro plunging, thanks to uncertainty in Germany, the US Dollar (UUP) benefited and rallied +0.49% to stay above its 50-day M/A.

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One Man’s Opinion: How Uncle Sam Inflates Away Your Life

Authored by MN Gordon via EconomicPrism.com,

“Inflation is always and everywhere a monetary phenomenon,” once remarked economist and Nobel Prize recipient Milton Friedman.  He likely meant that inflation is the more rapid increase in the supply of money relative to the output of goods and services which money is traded for.

As more and more money is issued relative to the output of goods and services in an economy, the money’s watered down and loses value. 

By this account, price inflation is not in itself rising prices.  Rather, it’s the loss of purchasing power resulting from an inflating money supply.

Indeed, Friedman offered a shrewd insight.  However, he also accompanied it with an opportunist mindset.  Friedman saw promise in the phenomenon of monetary inflation.  Moreover, he saw it as a means to improve human productivity and economic growth.

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ETFs On The Cutline – Updated Through 11/17/2017

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 263 (last week 247) 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 November 17, 2017

ETF Tracker StatSheet

http://www.theetfbully.com/2017/11/weekly-statsheet-etf-tracker-newsletter-updated-11162017/

DOW AND S&P 500 SLIP FOR THE WEEK

[Chart courtesy of MarketWatch.com]

  1. Moving the Markets

Center stage again were developments surrounding the House’s tax cut plan, and it’s now up to the Senate to either agree (no chance) or come up with mutually agreeable changes or adjustments. This uncertainty spread to the major indexes, which were unable to muster a strong enough charge to conquer the unchanged line. In the end, we gave back some of yesterday’s winnings with only the Nasdaq and SmallCaps managing to eke out some weekly gains.

The picture in our ETF portfolios was mixed as well. Emerging Markets (SCHE) headed solidly higher and added +0.62% on top of yesterday’s strong gain. SmallCaps (SCHA) and MidCaps (SCHM) fared well with increases of +0.43% and +0.41% respectively. On the downside, Semiconductors (SMH) surrendered -1.54% of its impressive YTD gains, followed by Transportations (IYT) with -1.13%.

Interest rates rose again with the 10-year yield climbing 4 basis points to end the week at 2.37%. We saw a wild week in the High Yield ETF HYG as a meltdown was followed by a melt up resulting in a higher close back on the bullish side of its 200-day M/A. Gold and Oil closed to the plus side today with gold again attempting to break through the $1,300 overhead ceiling.

The US dollar (UUP) had its worst week in a couple of months and dropped to a 4-week low by retreating -0.29% on the day.

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Weekly StatSheet For The ETF Tracker Newsletter – Updated Through 11/16/2017

ETF Data updated through Thursday, November 16, 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 +3.14% after having generated a new Domestic Buy signal effective 4/4/2016 as posted.

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Bounce Back Thursday

[Chart courtesy of MarketWatch.com]

  1. Moving the Markets

After skidding two days in a row, the major indexes bounced back and erased their recent losses with the S&P ending the session at the same level where we closed on Monday. Giving an assist was the widely expected passage of the tax bill in the House. That in itself is progress but not much of a reason to cheer since bipartisan support is conspicuously absent making it very likely that the final version will look much different.

Be that as it may, for today Wall Street traders were happy and pushed equities higher with the Nasdaq finishing at a new record. The ETFs we are invested in fared well; especially Semiconductors (SMH) galloped higher and gained a chest pounding +2.48%. Other impressive advancers were Emerging Markets (SCHE +1.77%), Transportations (IYT +1.68%) and US SmallCaps (SCHA +1.28%). The low ETF on the totem pole was Financials (XLF) with +0.04%.

Interest rates rose with the 10-year bond yield crawling 4 basis points higher to 2.37% causing the 20-year bond price (TLT) to slip -0.87%. On the other side of the spectrum, namely in High Yield Space, things reversed dramatically with HYG gapping higher and spiking +0.98% thereby wiping out 6 days of losses. The US Dollar moved in a tight range and managed to eke out a tiny +0.12% gain.

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