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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Lack Of Tax-Overhaul Progress Whacks Sentiment

[Chart courtesy of MarketWatch.com]

  1. Moving the Markets

While the major indexes suffered their biggest one-day percentage drops since September, as MSM reports, we have to remember that, when looking at the entire 2017 YTD performance, today’s 0.5% pullback is hardly newsworthy.

Nevertheless, a weak energy sector with XLE correcting -1.16% did not help matters. And, as I reported just about every day, skepticism about the tax-plan, or rather the lack of progress, kept any upward momentum in check. Today, we dropped right after the opening bell after which the usual recovery attempt was made, but it fell short mid-day as the bears kept the upper hand.

Needless to say, equity ETFs headed south to varying degrees. The exception was Financials (XLF), which gained +0.27%. On the downside, Semiconductors (SMH) slid -0.93% followed by the Dividend ETF (SCHD) with -0.76%.

Interest rates fell sharply with the yield on the 10-year bond slipping 5 basis points to 2.33%. That allowed the 20-year bond to stage a +1.09% rally, which wiped out some of its recent losses. The swings were wild in the High Yield arena as well with HYG taking a huge drop below its 200-day M/A only to recover and close unchanged.

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Major Indexes Sag As Tax Reform Acrobatics Continue

[Chart courtesy of MarketWatch.com]

  1. Moving the Markets

The major indexes sagged as uncertainty about the tax reform tug-of-war continued to take center stage. Not helping matters was a dive in crude oil along with weakness from heavyweights Apple (AAPL) and Boeing (BA).

But the stock that really took a spanking was GE (-5.89% for the day) after cutting its dividend by 50% yesterday. If you think that was bad, GE has now lost -43.4% YTD in a year were bulls ruled and the Dow climbed +18.5%. So much for putting too much credence into the payment of dividends!

Despite red numbers in the major indexes, we saw some green ones in ETF space. Aerospace & Defense (ITA) resisted the southerly trend along with, ironically, the Dividend ETF (SCHD) with modest gains of +0.15% and +0.12% respectively. On the downside, Emerging Markets (SCHE) led with -0.69% followed by Transportations (IYT) with -0.28%.

Interest rates retreated with the 10-year yield dropping 2 basis points to 2.38%, which allowed the 20-year bond (TLT) to recapture some of its recent losses by rallying +0.68%. The High yield bond ETF (HYG) was not so lucky and lost another -0.43%, which brought the price down to levels last seen in August.

Not to be outdone, the US Dollar (UUP) did a swan dive, gapped down -0.69% and is now honing in on a break of its 200-day M/A to the downside.

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