[Chart courtesy of MarketWatch.com]

1. Moving the Markets

An early rally, ahead of the Fed minutes, fizzled after their release with the S&P 500 kissing its unchanged line before rebounding and ending up slightly in the green. The Dow and Nasdaq followed suit in similar fashion.

Contributing to some turmoil was President Trump’s decision to disband his advisory panel while political tensions were casting doubt on his pro-growth plans. Then it was the Fed’s turn as the minutes showed that the Central Bank is struggling with sluggish inflation, which could mean either limited or no rate hikes in the near future, while they remain eager to start unwinding their $4.5 trillion asset portfolio.

Across the ETF spectrum, domestic equities headed higher led by MidCaps (SCHM) with a gain of +0.35% followed by Dividend ETFs (SCHD) with +0.24%. Things looked better on the International side where the Emerging Markets (SCHE) took top billing with +1.19% followed by SmallCap International ETFs (SCHC) adding +0.67%.

The Fed’s dovish statement helped interest rates to fall allowing the 20-year bond (TLT) to rally +0.37%. The US dollar (UUP) traded in a broad range but closed lower by -0.33% wiping out the gains of the last two days.

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[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Equities struggled all day to find some direction, but the session turned out to be nothing but aimless meandering around the unchanged line with the major indexes essentially remaining unchanged.

SmallCaps (SCHA) fared the worst with a loss of -0.68% closely followed by MidCaps (SCHM) giving back -0.31%. On the winning side, semiconductors (SMH) added +0.37%, despite the Nasdaq’s weak showing, and Transportations (IYT) notched a gain of +0.29%. The Dow had an interesting day with Boeing and Apple adding 30 points, while Home Depot’s -3.2% pounding took 30 points away leaving the index with a tiny gain of +0.02%.

Retailers crashed again as the Retail Apocalypse continued with XRT not just dropping -2.70% to a level last seen early July but also clearly breaking its 50-day M/A to the downside. If this current critical support is taken out as well, we’d be looking at lows last seen in 2013.

Interest rates spiked, and the 20-year T-bond lost -0.42%; gold dumped and the US dollar pumped for a change. UUP gapped higher and whipsawed throughout the session but ended up by +0.45%.

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[Chart courtesy of MarketWatch.com]

1. Moving the Markets

With the geopolitical tensions having been pushed hard by the MSM (Main Stream Media) last week, it’s no surprise that after the incessant jawboning waned, dip buyers appeared to ramp the indexes back towards their recent highs. The Dow turned out to be today’s laggard while the S&P 500 and Nasdaq gained solidly and also reclaimed their respective 50-day M/As.

Sure, while stability returned for this session, it should be clear that things could change in a hurry either via a well-timed tweet or a challenging headline. Across the ETF spectrum, semiconductors (SMH) took the lead with +1.97%, which was closely followed by Transportations’ (IYT) +1.77% and then SmallCaps (SCHA), which gained +1.31%. However, we still remain below last week’s level reached before Trump’s “fire and fury” speech.

Gold and Bonds slumped with the 20-year T-Bond (TLT) losing -0.51%, as risk (equities) went back into “on” mode after last week’s pullback. The VIX tumbled as volatility subsided, at least for the day. So did Crude Oil with -2.70%. Recovering a bit from last week’s drubbing was the US dollar (UUP) which bounced back +0.41%.

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From Art Cashin of UBS

We’ve noted over the last two weeks that the Dow Industrials have been diverging from most other indices and particularly the Dow Transports. An important part of the divergence has been the relative narrowness of the rally in the Dow. In today’s WSJ, Justin Lahart took note of the narrowness:

Americans cheering the U.S. stock market’s latest milestone should pause to thank the rest of the world for making it possible. The Dow Jones Industrial Average breached 22000 Wednesday after rising more than 2000 points so far this year. Boeing counted for 563 points of that gain. About 60% of its sales come from overseas.

No. 2, contributing 283 points, is Apple, which gets two-thirds of its sales abroad.

No. 3 is McDonald’s, contributing 239 points; foreign sales count for about two-thirds of its total.

Indeed, while there are notable exceptions (hello, International Business Machines ), the greater the share of a company’s sales come from overseas, the better its stock has tended to perform this year.

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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 256 (last week 281) 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.

ETF Tracker StatSheet

http://www.theetfbully.com/2017/08/weekly-statsheet-etf-tracker-newsletter-updated-08102017/

BOUNCING OFF THE BOTTOM

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

We saw a little bit of a recovery, after yesterday’s shakeout caused by N. Korea jitters, with the major indexes clawing back to close above the unchanged line. The gains were tiny but at least the Nasdaq had a solid showing with +0.64%; Semiconductors did even better by adding +0.92%.

For the week, the S&P 500 surrendered -1.45%, which is not exactly earth shattering, or even noteworthy, given the magnitude of the post-election rally. Again, ZH posted a nice summary of the ups and downs of this most recent roller coaster ride:

1. Dow’s worst week in 5 months (Mar ’17)
2. S&P’s worst week since pre-election (Nov ’16)
3. Russell 2000 worst week since Feb ’16
4. Financials worst week in 5 months
5. VIX biggest percentage spike since Aug ’15 (China Deval)
6. HY Credit Risk biggest jump since election (Nov ’16)
7. Silver’s biggest week since Jul ’16
8. Gold’s biggest week since Apr ’16
9. Offshore Yuan’s best week in 7 months (Jan ’17)

Today’s bounce was not exactly awe inspiring, so we’ll have to wait and see if and how the N. Korea events shape up over the weekend. Other assets that were affected negatively during the past 5 trading sessions were Energy, Financials and Retailers with the latter suffering the greatest losses.

The beneficiaries of this geopolitical uncertainty were bonds and gold. Bond yields dropped this week allowing the 20-year bond to rally although today it only added a meager +0.05%. Gold is now pushing against the $1,300 glass ceiling as it gained +2.32% for the week.

After its recent dead cat bounce, the US Dollar (UUP) took a nosedive and headed back towards its 15-month low losing another -0.37% on the day.

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