Stocks Slump, But Corn Looks Tasty!

Mon pic

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

U.S. stocks experienced a late day sell off that brought the benchmark indexes to a 4-month low. The sell-off was primarily a reaction to the weak December jobs report and the Fed’s comments about further reducing the stimulus. The December jobs report claimed that only 74,000 jobs were added in December, which was the smallest gain in three years. Investors may also be a bit on edge in anticipation of earnings releases from a number of large banks tomorrow.

On a positive economic note the Fed recorded a $53 billion budget surplus in December, which brings the government’s budget deficit down to $174 billion for Q1.

Google (GOOG) saw a 0.5% jump today as news spread that they are acquiring Nest Labs Inc., which develops technology for home automation (such as energy-efficient thermostats and smoke/carbon dioxide alarms).

It was all about Corn today in the ETF market.  2013 was a terrible year for the corn market as investors saw the Teucrium Corn ETF (CORN) drop by roughly 30% in 2013. After a horrendous 18 months however things might be looking up for corn. The (CORN) ETF soared in Friday trading and finished strong Monday, as the government’s report surprised the market with a reduction in corn yields.

While the anxiety in the markets caused our ETFs in the Spotlight to slip along with the indexes, it did not affect their long-term direction as the second table below shows.

2. ETFs in the Spotlight

In case you missed the announcement and description of this section, you can read it here again.

It features 10 broadly diversified ETFs from my HighVolume list as posted every Monday. Furthermore, they are screened for the lowest MaxDD% number meaning they have been showing better resistance to temporary sell offs than all others over the past year.

In other words, none of them ever triggered their 7.5% sell stop level during this time period, which included a variety of severe market pullbacks but no move into outright bear market territory.

Here are the 10 candidates:

MaxDD

All of them are in “buy” mode meaning their prices are above their respective long term trend lines by the percentage indicated (%M/A).

Now let’s look at the MaxDD% column and review the ETF with the lowest drawdown as an example. As you can see, that would be XLY with the lowest MaxDD% number of -5.73%, which occurred on 11/15/2012.

The sell off in the month of June 2013 did not affect XLY at all as its “worst” MaxDD% of -5.73% still stands since the November 2012 sell off.

A quick glance at the last column showing the date of occurrences confirms that five of these ETFs had their worst drawdown in November 2012, while the other five were affected by the June 2013 swoon, however, none of them dipped below their -7.5% sell stop.

Year to date, here’s how the above candidates have fared so far:

YTD

3. Domestic Trend Tracking Indexes (TTIs)

Our Trend Tracking Indexes (TTIs) headed south as well, but they remain above their long term trend lines by the following percentages:

Domestic TTI: +3.70% (last close +4.33%)

International TTI: +6.29% (last close +6.83%)

 

About Ulli Niemann

Ulli Niemann is the publisher of "The ETF Bully" and is a Registered Investment Advisor. Learn more
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