ETF Tracker Newsletter For July 21, 2017

ETF Tracker StatSheet

http://www.theetfbully.com/2017/07/weekly-statsheet-etf-tracker-newsletter-updated-07202017/

LOWER ON THE DAY BUT HIGHER ON THE WEEK

[Chart courtesy of MarketWatch.com]

  1. Moving the Markets

The major indexes, especially the Nasdaq, made a valiant effort to dig themselves out of an early hole in an attempt to conquer the unchanged line in order to keep the 10 day winning streak alive. Traders were “stunned” when the Nasdaq failed to achieve its 11th day of gains in a row. Of course, I am being facetious, but in the face of a market about as complacent as I have ever seen it, the indexes simply fell short despite manipulation to the contrary.

Things started out very poorly in Europe when concerns about alleged antitrust collusion for the past 20 years sent stock prices of the German Big-3 car makers (VW, Mercedes, BMW) into a tail spin, which was followed by their major indexes sinking sharply. The German DAX took the lead and lost -1.66%, as news spread across the Atlantic pushing the S&P 500 down by about -0.33%.

Even clubbing the VIX (Volatility Index) like baby seal in order to pump up stocks did not get the desired result and the VIX closed at 9.31, its lowest in history! Such are the methods being used to keep equities elevated. Utilities (XLU) were the week’s best performer obviously a result of sinking interest rates, which also assisted the 20-year bond to continue its bullish 2-week rebound. The whipping boy of the year, AKA the US dollar (UUP), extended its slide and lost another -0.33% to its lowest point since May 2016. It is now on target for the 6th monthly drop out of the last 7.

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Weekly StatSheet For The ETF Tracker Newsletter – Updated Through 07/20/2017

ETF Data updated through Thursday, July 20, 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 +3.87% after having generated a new Domestic Buy signal effective 4/4/2016 as posted.

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Nasdaq Continues Ascent Into Record Territory

[Chart courtesy of MarketWatch.com]

  1. Moving the Markets

The major indexes limped around their respective unchanged lines all day with only the Nasdaq crawling above it and in the process setting another record close (10 up days in a row). Another soft economic data point disappointed as the Philly Fed survey missed expectations and slumped to its lowest point since November 2015. The survey summed up that “new orders collapsed, employees tumbled and the average work week slumped.” Not exactly awe inspiring, but in this new normal environment, any type of news are good for stocks.

The VIX tanked and thereby was the savior of the day as hawkish talk from BoJ and ECB could not derail the major indexes. However, what was derailed was the US dollar, which took another hit as UUP (-0.61%) dove to its lowest level since last August and making it 8 down days out of the last 10 sessions.

Interest rates leaked lower helping utilities (XLU) gain +0.69% while the 20-year T-Bond managed to tack on +0.29% and keeping its rebound off the 200-day M/A alive and well for the time being. Gold knee jerked and closed in the green while Crude oil went the other way and lost -0.83%.

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Low Volume, No News, Markets In Record Territory

[Chart courtesy of MarketWatch.com]

  1. Moving the Markets

Despite IBM being a drag on the Dow (about -47 points), and the Transportation index (IYT) stumbling for the third day in a row, its biggest drop in 2 months, all three major indexes were able to march into record territory on low volume and no earthshaking news.

Helping the bullish cause were better-than-expected earnings from Morgan Stanley, which helped to create some optimism in the face of a slowing economy and, at least for the day, lent support to the current lofty index levels.

Across asset classes, SmallCaps took top billing with SCHA gaining a solid +1.02%, which was closely followed by Semiconductors (SMH) and MidCaps (SCHM) adding +0.99% and +0.94% respectively. Financials struggled but ended up in the green and Retail continued its recent bounce. Interest rates remained unchanged, while the US dollar (UUP) did its best dead-cat-bounce imitation by gaining +0.24%.

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Netflix Pushes Nasdaq To Record Highs

[Chart courtesy of MarketWatch.com]

  1. Moving the Markets

The major indexes spent most of the day below unchanged line. However, thanks to the upward bias in part caused by Netflix reaching nosebleed territory with a P/E ratio of 197, higher than Amazon’s 190, the Nasdaq set another record. Netflix surged over 13% thanks to a surprise jump in international subscriber numbers.

The Dow and S&P lagged but managed to climb out of an early hole as the VIX was pushed down to ensure a positive close. Amazingly, the Nasdaq managed this melt-up despite a negative advance/decline ratio, which simply confirms that it was all about Netflix with the rest of the market meandering.

US macro data kept weakening, which caused bond yields to tumble to their lowest level since June and in the process helping equities to wipe out early losses. The 20-year T-bond was the beneficiary and gained +0.87% on the day. Oil rebounded and gold had another good session by conquering its 200-day M/A. Of course, the has to be a loser and that was again the US dollar (UUP) which, after 2 days of stability, got spanked again and closed down -0.53%, its lowest point since early September 2016. YTD, UUP has now lost a staggering -8.9%.

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Hugging The Unchanged Line

[Chart courtesy of MarketWatch.com]

  1. Moving the Markets

The major indexes zigzagged throughout the day but stayed close to the unchanged line, and that’s where we ended up with only the Nasdaq closing fractionally higher. On the front burner is much anticipation about the upcoming earnings season with some key quarterly results due out later this week.

On the day, healthcare and financials dipped a modest -0.3% while utilities gained 0.4%, but the retail ETF XRT turned out to be the winner by adding +0.95% which, when looking at the 1 year chart, looks like another dead cat bounce.

China stocks took an overnight dive with their SmallCaps tumbling to a low last seen in early 2015. That brings the loss to 10%; just for the last week. Interest rates retreated with the 20-year T-bond ETF TLT gaining +0.28%. The US dollar meandered and UUP closed unchanged. Crude oil leaked lower, but the precious metals continued to show signs of life by closing higher for the 5th out of the last 6 days.

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