Equities Mixed But Dow Squeezes Out A Gain

[Chart courtesy of MarketWatch.com]

  1. Moving the Markets

Treading water below the unchanged line was the theme of the day as weakening upward momentum held the major indexes in check. Despite the usual afternoon ramp, only the Dow managed to eke out a gain to notch its sixth straight record high close.

It was a mixed bag with declining energy stocks dragging on the indexes while, at the same time, a pause was in order to digest the gains of the Trump rally. With the 4th quarter earnings season almost being in the rear view mirror, today’s focus was again on Trump’s lofty promises of cutting corporate taxes and reducing regulations.

There was a lot of hope, enthusiasm and excitement powering this rally, but we’re now getting closer to a point where Wall Street wants to see more concrete results, in other words, the theme has shifted to either “put up” or “shut up.”

On the earnings side, the big assist that helped the Dow close in the green, came from Cisco Systems (+2.38%) after its quarterly results were posted late Wednesday. We now have to wait and see what the next driver will be to keep the recent upward momentum intact.

(more…)

Posted in Market Commentary | Tagged , , , , | Leave a comment

S&P 500 Registers A Seven-Session Winning Streak

[Chart courtesy of MarketWatch.com]

  1. Moving the Markets

The bulls continued to have their way on Wall Street with today’s support coming from positive data confirming that the US economy is heating up and leaving the Fed behind in terms of controlling inflation via higher rates. The CPI number can only be described as “blistering” at a strong 2.3% print vs expectations of a 2.1% reading, which is well above the Fed’s target of 2.0%.

This was followed by strong retail sales, after a bleak Holiday season, as consumers appeared to be optimistic over Trump’s plans. Retails sales jumped 0.4% in the month of January, much better than the 0.1% expected. The only fly in the ointment is the recent weakness in wages (-0.6% YoY) which, in light of rising inflation, casts a shadow on how long this spending spree can last.

So what is really behind the current “melt-up” rally? Fed chief Yellen provided the answer today during her testimony in front of the House Financial Services committee: “I think market participants likely are anticipating shifts in fiscal policy that will stimulate growth and perhaps raise earnings.” Yes, and that is commonly referred to as the Trump rally. My only question is: How long can this last without a serious correction?

(more…)

Posted in Market Commentary | Tagged , , , , | Leave a comment

The Rally Continues: Low Interest Rates Are Good News And… High Interest Rates Are Good News

[Chart courtesy of MarketWatch.com]

  1. Moving the Markets

All eyes were on the Fed today, or more specifically Janet Yellen’s testimony before the U.S. senate banking committee. Among much jawboning Yellen warned that “waiting too long to remove accommodation would be unwise,” along with this bon mot that “at our upcoming meetings, the committee will evaluate whether employment and inflation are continuing to evolve in line with these expectations, in which case a further adjustment of the federal funds rate would likely be appropriate.” Isn’t the latter what they evaluate at every meeting?

As always, Yellen left the door wide open if three interest rate hikes would be warranted this year as they originally signaled last December. In other words, the direction of interest rates is as murky as ever. Nevertheless, the markets interpreted her speech as being hawkish (higher rates) and yields surged with the 10-year yield gaining 4 basis points to +2.47%. As a result, the widely held 20-year Treasury Bond ETF (TLT) lost -0.72%.

With higher rates, you would have expected equities to tank—but no—the rally continued with all major indexes gaining as the above table shows. Bank stocks and the dollar headed higher along with gold, which gained marginally. Right now, so it seems, we’re back to where any news is good news for stocks…

(more…)

Posted in Market Commentary | Tagged , , , , , | Leave a comment

Wall Street Bets On Trump

[Chart courtesy of MarketWatch.com]

  1. Moving the Markets

Last week’s upward momentum showed no signs of letting up as the rally continued today with the major indexes adding over +0.5%. The conviction is that Trump’s promised tax cut will be a boon to the economy. While that may be true, the open question as to not only its feasibility, but also its timely implementation, remains the big unknown. As usual, hope and reality are very much disconnected on Wall Street.

Nevertheless, the bulls are in charge and Trump has been working more like a business executive rather than a politician by reaching out to influential world leaders by phone, while concurrently holding high profile meetings with executives ranging from automakers to technology companies.

While economic data points appear disconnected from the stock market, the S&P 500 companies are on track for their best profit growth in 9 quarters. On deck is Fed chief Yellen’s annual testimony on Capital Hill tomorrow and Wednesday, which hopefully clarifies interest rate policy as it is uncertain whether more hikes during 2017 will actually materialize.

(more…)

Posted in Market Commentary | Tagged , , , , | Leave a comment

One Man’s Opinion: Grant Williams: A Punch In The Face For Central Bankers Is Coming

By Adam Taggert

Grant Williams, publisher of the economic blog Things That Make You Go Hmmm and principal of Real Vision TV, returns to the podcast this week to discuss his expectation of a return of volatility to the markets.

Grant warns that over the past seven years, the various financial markets around the globe have melded into a single world market dominated by trading algorithms and the central banks. This new system only knows how to operate effectively in one direction: Up.

Grant is very concerned that a return of volatility will act as a wrench tossed into the gears, quickly throwing the world financial system into panic.

I’ve spent a lot of time thinking about the incredible amount of counter-intuitive moves that we see in markets.  It’s all inextricably linked to the rise of computer trading.

Once you get momentum, markets start going up based on the back of algorithms. Then we start to see the day traders coming on the back of it, and everyone starts to gain confidence.

Markets are global now. There really is only one equity market around the world, certainly when they’re going up. We’ll see when markets turn and start to go down. And I think that’s definitely something we need to talk about because I suspect it will be very, very different market action when this trend turns.

(more…)

Posted in Market Review | Tagged | Leave a comment

ETFs On The Cutline – Updated Through 02/10/2017

Below please find the latest High Volume ETFs Cutline report, which shows how far above or below their respective long-term trend lines (39 week SMA) my currently tracked ETFs are positioned.

This report covers the HV ETF Master List from Thursday’s StatSheet and includes 366 High Volume ETFs ETFs, defined as those with an average daily volume of more than $5 million, of which currently 239 (last week 228) are hovering in bullish territory. The yellow line separates those ETFs that are positioned above their trend line (%M/A) from those that have dropped below it.

Take a look:

The HV ETF Master Cutline Report            

In case you are not familiar with some of the terminology used in the reports, please read the Glossary of Terms.

If you missed the original post about the Cutline approach, you can read it here.

Posted in ETFs on the Cutline | Tagged | Leave a comment