Earnings Push S&P 500 And Nasdaq To New Highs

[Chart courtesy of MarketWatch.com]

  1. Moving the Markets

Today it was a battle between earnings and uncertainty over Trump’s pro-business agenda. At least for today, earnings won the battle, and the major indexes rode the positive momentum higher. The materials and financial sectors fared the best climbing 2.5% and 1.2% respectively.

With earnings season heating up, so far S&P profits are supposed to have risen some 6.7% in the last quarter which, if true, would make it the strongest growth in a couple of years. However, valuation-wise, we have moved towards lofty levels with the post-election rally, which was based on nothing but hope and promises. Given that, the S&P 500 is trading at about 17 times forward 12-month earnings, which is far above the 10-year median of 14.2.

Then again, none of that matters, it’s up, up and away until one day you’ll hear this giant sucking sound when the air comes out of the bubble; it’s not a matter of “if” but “when.” In the meantime, we’ll stay the course and follow the major trend higher until it ends.

  1. ETFs in the Spotlight (updated for 2017)

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

It features 10 broadly diversified and sector ETFs from my HighVolume list as posted every Saturday. 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.

The below 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 2017 candidates have fared so far:

Again, the %M/A column above shows the position of the various ETFs in relation to their respective long term trend lines, while the trailing sell stops are being tracked 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) moved up as positive momentum generated from decent earnings reports supported the bullish case.

Here’s how we closed 1/24/2017:

Domestic TTI: +1.76% (last close +1.49%)—Buy signal effective 4/4/2016

International TTI: +4.62% (last close +4.12%)—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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