S&P 500 Snaps Losing Streak: A Prelude To A Strong Quarter Close?

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

  1. Moving the markets

The S&P 500 bounced back, halting a three-day losing streak, buoyed by a substantial short squeeze that counteracted a $32 billion equity sell-off by pension funds. The tech-heavy MAG 7 staged a late-day rally, securing a positive close.

In the spotlight, Cintas shares soared 7% following impressive earnings, while Merck’s stock climbed nearly 5%, reaching a new peak. These gains come on the heels of a downturn earlier in the week, despite which, all major indexes are poised to conclude the month and quarter in positive territory when trading wraps up on Thursday.

Should this upward trend persist, it would signify the most robust first-quarter performance for the S&P 500 and Dow since 2019 and 2021, respectively, with anticipated increases of 13.1% and 7.4%. Moreover, all three indexes are on track for their fifth consecutive month of gains and a second successive quarter in the black.

While the market’s ascent continues, the looming threat of an unforeseen event could trigger a market correction. The question arises: Will an external shock disrupt the market’s current calm? Increased volatility in China’s market or interest rate adjustments in Mexico and Switzerland could be the catalysts for change, ushering in a period of uncertainty.

Bitcoin ETFs experienced a surge in inflow, leading to an initial spike, but the momentum faded as the SEC’s ongoing lawsuit against Coinbase dampened investor sentiment, resulting in increased selling and a retreat to the $69k level for Bitcoin.

Oil prices made a comeback, offsetting the previous day’s declines. The dollar remained steady, while gold ascended, testing the $2,200 mark and closing at an all-time high in US dollars.

As we approach the final trading day of March, one wonders: What surprises might the markets hold in store for us tomorrow?

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Market Muddle: S&P 500 At A Crossroads After Mixed Data

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

  1. Moving the markets

Today, U.S. stocks experienced a modest uptick as traders aimed to reignite the rally that previously propelled equities to record levels, despite a slight setback in the last session. Newly released economic figures revealed a 1.4% increase in orders for durable goods in February, surpassing economists’ predictions of 0.8%.

One analyst suggested that the combination of robust growth data and inflation rates exceeding forecasts may not be as dire as presumed, attempting to downplay the potential long-term impact of rising inflationary pressures.

Contrastingly, the consumer confidence index for March fell short of expectations, signaling a decline in economic optimism among U.S. consumers.

Despite this, the “hard data” showed signs of resilience, with a rebound in durable goods orders and a continued rise in home prices. This mix of discouraging and encouraging news nudged expectations for a rate cut slightly higher.

Initially, the market responded positively to this paradoxical situation, where good news was perceived negatively and vice versa. However, two late day sell programs ultimately led to a downturn in the major indexes, marking the S&P 500’s third consecutive day of losses.

Concurrently, an early short squeeze quickly dissipated, echoing the pattern observed over the previous two days.

The MAG 7 stocks also experienced a sell-off. Bond yields fluctuated but remained relatively stable, while Bitcoin successfully maintained its $70k level after assimilating the prior day’s gains.

The dollar saw little movement, gold briefly approached the $2,200 mark before retreating to close with minimal gains, and oil prices experienced a slight decline in anticipation of the upcoming inventory data release.

As traders weigh these mixed signals, the question arises: Will the S&P 500 face its fourth consecutive day of decline, or will a resurgence of bullish sentiment steer the index back towards growth?

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Bitcoin’s Bullish Surge Overshadows Mixed Market Data

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

  1. Moving the markets

Today, Wall Street’s recent surge took a pause, leading to a dip in stock values as the trading week commenced. Despite this, the market is poised for its fifth straight month of gains, with major U.S. stock benchmarks reaching unprecedented closing highs just last week. The S&P 500 saw an increase of approximately 2.3%, the Dow Jones Industrial Average edged closer to the 40,000 level with a nearly 2% rise, and the Nasdaq Composite climbed about 2.9%.

These upward trends were propelled by the Federal Reserve’s reaffirmation of its rate-cutting schedule for the year and the continued excitement over tech stocks, spurred by an AI-driven rally. Although the American Association of Individual Investors Sentiment Survey indicates that overall investor sentiment is still above average, concerns linger about the repercussions of a prolonged rally and persistently high interest rates.

Historical analysis of Federal Reserve rate cycles since the 1970s suggests that the initial rate cut in a cycle poses a greater threat to investors than the subsequent pause. This week, the release of the February personal consumption expenditures price index (PCE) will shed light on inflation trends. However, the market’s response will only be observed the following Monday due to the Good Friday holiday.

On a day marked by disappointing housing and manufacturing data, bond yields and oil prices rose, but Bitcoin dominated the news cycle with a surge above $71,000, partly driven by short sellers covering their positions. The weaker dollar, influenced by a shift in rate-cut expectations, also favored gold prices.

Amidst geopolitical tensions in the Middle East and Russia, bond yields increased, and crude oil prices surged. The MAG 7 stocks recovered from an early plunge, and while Nvidia enjoyed a rally, it failed to surpass its March peak.

With time remaining in this abbreviated trading week, I wonder: What will the next market move be?

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ETFs On The Cutline – Updated Through 03/22/2024

Ulli ETFs on the Cutline Contact

Do you want to know which ETFs are hot and which ones are not? Then you need my High-Volume ETF Cutline report. It tells you how close or far each of the 311 ETFs I follow is from its long-term trend line (39-week SMA). These are the ETFs that trade more than $5 million a day, so they are not some obscure funds that nobody cares about.

The report is split into two parts: The winners that are above their trend line (%M/A), and the losers that are below it. The yellow line is the line of shame that separates them. You can see how many ETFs are in each group and how they have changed since the last report (268 vs. 271 current).

Take a peek:

The HV ETF Master Cutline Report

If you are confused by some of the terms we use, don’t panic. I have a helpful Glossary of Terms for you.

If you want to learn more about the Cutline method and how it can make you rich (or at least less poor), read my original post here.

ETF Tracker Newsletter For March 22, 2024

Ulli ETF Tracker Contact

ETF Tracker StatSheet          

You can view the latest version here.

DOW CHARGES AHEAD: BEST WEEK OF THE YEAR DESPITE TODAY’S SLIP

[Chart courtesy of MarketWatch.com]

  1. Moving the markets

Despite a slight dip in today’s session, the stock market maintained its upward trajectory, with the Dow Jones Industrial Average charging towards its most impressive week of the year. The three major indexes all posted robust gains: the S&P 500 surged by 2.3%, the Nasdaq climbed 2.8%, and the Dow led the pack with a 2.1% increase, marking its strongest performance since December.

The market’s overall trend remains bullish, highlighted by a series of new highs and on course for a fifth straight month of growth. This week’s Federal Reserve meeting contributed to the optimism, as the central bank held interest rates steady. Fed Chair Powell’s remarks suggested that rate cuts are on the horizon, despite recent high inflation figures that had some investors bracing for a delay in monetary easing. This assurance was sufficient to propel the market forward.

While the markets seem to be riding a wave of enthusiasm, it’s worth noting that the Fed’s comments don’t guarantee a rate cut in June. Nonetheless, the Economic Surprise Index is on the rebound, and expectations for a rate reduction are mounting. Consequently, it’s no shock to traders that stocks have soared to new heights, with all major indexes wrapping up a strong week, led by the Nasdaq’s performance.

Midweek saw an intense short squeeze that eventually fizzled out, resulting in a subdued finish. Meanwhile, falling bond yields lent support to the markets, the dollar surged to a six-week peak, and Bitcoin held steady around the $64k mark. Gold hit a record high early in the week but retreated to close nearly unchanged, mirroring crude oil’s trajectory after its peak on Tuesday.

However, the recent surge in crude oil prices, now over $80, could spell trouble if the trend persists. Rising fuel costs may negatively impact the upcoming Consumer Price Index (CPI) report and influence the Federal Reserve’s decision on whether to implement a rate cut in June.

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Weekly StatSheet For The ETF Tracker Newsletter – Updated Through 03/21/2024

Ulli ETF StatSheet Contact

ETF Data updated through Thursday, March 21, 2024

How to use this StatSheet:

  1. Out of the 1,800+ ETFs out there, I only pick the ones that trade over $5 million per day (HV ETFs), so you don’t get stuck with a lemon that nobody wants to buy or sell.
  1. Trend Tracking Indexes (TTIs)

These are the main indicators that tell you when to buy or sell Domestic and International ETFs (section 1 and 2). They do that by comparing their position to their long-term M/A (Moving Average). If they cross above, and stay there, it’s a green light to buy. If they fall below, and keep going, it’s a red light to sell. And to make sure you don’t lose your shirt if things go south, I also use a 12% trailing stop loss on all positions in these categories.

  1. All other investment areas don’t have a TTI and should be traded based on the position of each ETF relative to its own trend line (%M/A). That’s why I call them “Selective Buy.” In other words, if an ETF goes above its own trend line, you can buy it. But don’t forget to use a trailing sell stop of 12%, or less if you’re feeling nervous.

If some of these words sound like Greek to you, please check out the Glossary of Terms and new subscriber information in section 9.

  1. DOMESTIC EQUITY ETFs: BUY— since 11/21/2023

Click on chart to enlarge

This is our main compass, the Domestic Trend Tracking Index (TTI-green line in the above chart). It has broken above its long-term trend line (red) by +11.55% and is in “Buy” mode as posted.

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