Reaching The Melt-Up Zone

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[Chart courtesy of MarketWatch.com]

  1. Moving the Markets

Even President-elect Trump’s early remarks that “I am going to bring down drug prices” couldn’t prevent the major indexes from storming into record territory with the exception being Healthcare-names as the Biotech ETF IBB got flattened by losing -2.94%.

It started in Europe where, despite the worsening Italian banking crisis, which is counting on a bailout, investors ignored all news, good or bad, and decided that equities were the place to be. All six major European indexes ended up in the green with the FTSE being the leader sporting a gain of +2.10% followed closely by the DAX with +1.96%.

A new intra-day high in the Transportation index, the first time in 2 years, confirmed the bullish tone as bonds, stocks, gold and the VIX all closed higher. The indexes inched up in the morning when all of a sudden “a buying algo got excited,” as ZH put it succinctly:

S&P futures and the SPY ETF suddenly exploded in volume and ramped higher. In those few seconds 2 million SPY shares went through (around $450 million) and 32,000 e-mini contracts (around $3.5 billion) screamend through the markets.

This certainly is not what you would consider a normal market based on fundamentals, it’s a manipulated market supported by nothing but hope and hot air, which will not end well. In the meantime, however, we will enjoy the ride but are prepared to jump ship should the need arise. After all, the following picture demonstrates the only world of reality:

gdp

  1. 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 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.

  1. Trend Tracking Indexes (TTIs)

Our Trend Tracking Indexes (TTIs) jumped higher as both equities and bonds rallied at the same time benefiting the Domestic TTI.

Here’s how we closed 12/7/2016:

Domestic TTI: +1.36% (last close +0.89%)—Buy signal effective 4/4/2016

International TTI: +3.56% (last close +2.22%)—Buy signal effective 7/19/2016

Disclosure: I am obliged to inform you that I, as well as my advisory clients, own some of the ETFs listed in the above table. 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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