Markets Bounce Higher; Responding Well To Yellen’s Speech

Wed pic

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

Wednesday was a rather uneventful day across the board with the S&P 500 and Dow climbing and the Nasdaq stumbling. Tech stocks continued to fall out of favor as worries of overvaluation continue to be the culprit. A number of Nasdaq listed stocks have taken quite a beating over the past two weeks, thus it comes as no surprise that Twitter (TWTR), AOL (AOL), GroupOn (GRPN), Zullily (ZU) and FireEye (FEYE) are all down more than 20% in the last two days.

On the positive, investors were receptive to Janet Yellen’s speech today, wherein she told the Joint Economic Committee of Congress that a tough job market and weak inflation meant that the Fed will likely keep borrowing rates low for a “considerable time.” Thus, the economy will still need the Fed’s help.

In tech news, Yahoo’s (YHOO) stock dropped 6.6% today, which came as a surprise in that Yahoo is one of the largest shareholders of Chinese e-commerce giant Alibaba, which filed Tuesday its much-anticipated plans to sell shares in what could be one of the biggest initial public offerings ever.

And finally, Ford Motors (F) announced today that it will buy back about 116 million shares of company stock worth about $1.8 billion. The Michigan-based automaker says the buybacks will help offset potential dilution from convertible debt and stock-based compensation for employees. The stocked closed the day up 1%.

Our 10 ETFs in the Spotlight recovered nicely with one of them making a new high; 9 of them remain on the plus side YTD.

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).

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

YTD

To be clear, the first table above shows the position of the various ETFs in relation to their respective long term trend lines (%M/A), while the second one tracks their trailing sell stops in the “Off High” column. The “Action” column will signal a “Sell” once the -7.5% point is taken out in the “Off High” column.

3. Domestic Trend Tracking Indexes (TTIs)

Our Trend Tracking Indexes (TTIs) were mixed with the Domestic one slightly gaining and the International one slipping a bit:

Domestic TTI: +2.14% (last close +2.00%)

International TTI: +3.27% (last close +3.43%)

Disclosure: I am obliged to inform you that I, as well as advisory clients of mine, own some of these listed ETFs. Furthermore, they do not represent a specific investment recommendation for you, they merely show which ETFs from the universe I track are falling within the guidelines specified.

About Ulli Niemann

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