Markets Continue Their Rally; Fast Food And Oil Up

Wed pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

The stock market rally continued modestly here in the U.S. today, driven higher by a rebound in oil prices on negative news and solid earnings reports from international Yum Brands companies.

Yum Brands (YUM), the parent company of fast food giants KFC, Taco Bell and Pizza Hut, handily beat first-quarter earnings expectations, mostly driven by growth in China. The company reported earnings of $391 million for Q1, up 8% from $362 million a year ago. Earnings per share came in 8 cents above estimates at 95 cents a share. The report pushed Yum shares up 4.1% in after-hours trading to $85.95, up $3.42. Increased performance was due to a 42% boost of sales in China, according to CEO Greg Cred.

Wall Street is in the heart of the corporate earnings season. As I have discussed in previous articles here, many analysts were predicting a 7-8% decline. The results, thus far have been slightly better than expectations, but it is nothing to go crazy over. If you simply set the bar low enough, anybody can beat expectations, which is the goal of this earnings season.

Heading into Wednesday’s session, profits for S&P 500 companies have reported contracting 7.5% in Q1. That is bad news, so the markets will likely follow the theme of the last year and move higher…

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.

Here are the 10 candidates:

MaxDD

The above table simply demonstrates the magnitude with which some of the ETFs are fluctuating in regards to their positions above or below their respective individual trend lines (%M/A). A break below, represented by a negative number, shows weakness, while a break above, represented by a positive percentage, shows strength.

For hundreds of ETF/Mutual fund choices, be sure to reference Thursday’s StatSheet.

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

YTD

Again, 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 has been taken out in the “Off High” column.

3. Trend Tracking Indexes (TTIs)

Our Domestic Trend Tracking Index (TTI) barely changed as the major indexes closed up but not by much. We’re still waiting for the International TTI to shows us some staying power above the line before a new Buy signal is triggered.

Here’s how we ended up:

Domestic TTI: +2.02% (last close +2.06%)—Buy signal effective 4/4/2016

International TTI: +0.95% (last close +0.90%)—Sell signal effective 8/21/2015

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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