ETFs On The Cutline – Updated Through 02/21/2020

Below, please find the latest High-Volume ETF 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 322 High Volume ETFs, defined as those with an average daily volume of more than $5 million, of which currently 272 (last week 279) 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.      

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ETF Tracker Newsletter For February 21, 2020

ETF Tracker StatSheet          

You can view the latest version here.

SLIDING INTO THE WEEKEND

[Chart courtesy of MarketWatch.com]

  1. Moving the markets

More downside momentum emerged this morning, as the coronavirus fallout continues with traders finally realizing that consumer and producer sentiment has been crippled, and that even the almighty the Fed can’t just simply reboot things by printing a few trillion dollars.

Virus cases are rebounding in China and soaring in South Korea, as the flow of assets into safe havens, like gold and bonds, pulled equities off their lofty levels. Despite this being the worst down week in four, the pullback has been modest, so far.

But, as manufacturing data from around the world comes in, worries about slower economic growth, or in some cases no growth, may continue to weigh on equity markets. Hence the flight into gold and bonds, with the 30-year bond yield now scoring an all-time record low of 1.89%. Sounds like something is amiss when considering that at the same time, equities are less than 1% off record highs.

It’s clear that a supply chain disruption is a sure thing and will affect the U.S. as well, with the first indication being the PMI manufacturing index, which has collapsed into contraction.

Still, the damage for the week was relatively minor with the S&P 500 and Nasdaq surrendering -1.3% and -1.7% respectively.

So far, the major trends remain intact, and none of our trailing sell stops are close to being triggered. However, what happens if the powers to be will not reopen the liquidity spigot, as Bloomberg demonstrates in this chart?

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Weekly StatSheet For The ETF Tracker Newsletter – Updated Through 02/20/2020

ETF Data updated through Thursday, February 20, 2020

Methodology/Use of this StatSheet:

1. From the universe of over 1,800 ETFs, I have selected only those with a trading volume of over $5 million per day (HV ETFs), so that liquidity and a small bid/ask spread are assured.

2. Trend Tracking Indexes (TTIs)

Buy or Sell decisions for Domestic and International ETFs (section 1 and 2), are made based on the respective TTI and its position either above or below its long-term M/A (Moving Average). A crossing of the trend line from below accompanied by some staying power above constitutes a “Buy” signal. Conversely, a clear break below the line constitutes a “Sell” signal. Additionally, I use a 7.5% trailing stop loss on all positions in these categories to control downside risk.

3. All other investment arenas do not have a TTI and should be traded based on  the position of the individual ETF relative to its own respective trend line (%M/A). That’s why those signals are referred to as a “Selective Buy.” In other words, if an ETF crosses its own trendline to the upside, a “Buy” signal is generated. Since these areas tend to be more volatile, I recommend a wider trailing sell stop of 7.5% -10% depending on your risk tolerance.

If you are unfamiliar with some of the terminology, please see Glossary of Terms and new subscriber information in section 9.     

1. DOMESTIC EQUITY ETFs: BUY — since 02/13/2019

Click on chart to enlarge

Our main directional indicator, the Domestic Trend Tracking Index (TTI-green line in the above chart) is now positioned above its long-term trend line (red) by +8.45% after having generated a new Domestic “Buy” signal effective 2/13/19 as posted.

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Comeback Wednesday

[Chart courtesy of MarketWatch.com]

  1. Moving the markets

With the effects of the coronavirus on everyone’s mind, China felt obliged to assure the world that it will take measures to help virus-stricken businesses by identifying weak links in supply chains. That was enough to get a rebound started with the S&P 500 and Nasdaq promptly scoring new intra-day all-time highs.

At the same time, the Chinese claimed that the rate of new cases has allegedly started to slow down creating optimism that the much-feared trade and travel disruptions may not be as bad as assumed, but the WHO still has recommended caution.

Helping the rebound was the release of the Fed’s minutes indicating that officials think that the economy appeared stronger in late January than had been expected. As a result, interest rates were kept unchanged, although concerns were voiced about the threat of the coronavirus, not just in China but globally as well.

Looking at the big picture, domestic equities have kept their bullish trend intact this month, on one hand helped by positive earnings reports while, on the other, being neutralized a tad as global growth has slowed due to the effects of the virus, the full impact of which is still to be felt.

However, right now, the bullish theme continues unabated.

(more…)
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Apple Rattles Wall Street

[Chart courtesy of MarketWatch.com]

  1. Moving the markets

Powerhouse Apple Inc. pulled the plug on Wall Street this morning, after announcing that its second quarter results may be impacted by the virus outbreak in China.

This in turn stoked fears again that any potential interruptions of supply chains will have far-reaching consequences not just for worldwide economies but also the financial markets.

Apple clearly stated that its monetary guidance for the second quarter will not be met, because its suppliers’ manufacturing has been affected, but discussions with health experts and suppliers continue full force.

Sure, Wall Street expected some of these announcements, but the magnitude of it came as a surprise. However, financial markets don’t like surprises, hence the sell-off today. In other words, the always optimistic traders, who had shaken off concerns about the disease, are now facing a dose of reality.

While the mid-day recovery pulled the indexes off their worst levels, only the Nasdaq managed to gather enough steam to close in the green.

Still, it’s amazing when the world’s largest company, Apple, issues a warning on a holiday about the unknown fallout from the coronavirus, and the markets barely seem to notice, as the mid-session drop caused dip buyers to step in to “save” the bullish theme.

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ETFs On The Cutline – Updated Through 02/14/2020

Below, please find the latest High-Volume ETF 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 322 High Volume ETFs, defined as those with an average daily volume of more than $5 million, of which currently 279 (last week 271) 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