Trade Headline Volleys Soften Markets

[Chart courtesy of MarketWatch.com]

  1. Moving the markets

Softness in the markets prevailed for the third day, as a bunch trade news volleys made their way back and forth and kept the major indexes in limbo. An early drop shifted into rebound mode, an occurrence we’ve seen regularly in the recent past, but it fell short of conquering the unchanged lines.

Even though we closed slightly in the red, the continued resilience of the market, to shake off bad news and remain at ridiculously elevated levels, is remarkable. The see-saw moves over the past few days continued with utter abundance, with the market moving headlines being clearly recognizable in this chart.

With a record “trade deal on/trade off” reversals being the new norm, it now included “unnamed sources” saying that “the US would be willing to delay the December 15 tariffs, even if there is no trade deal,” but that the pro-Hong Kong human rights bill passed by Congress could be a major obstacle to any agreements.

Despite equity weakness, bond yields rose, which hurt bond prices and low volatility ETFs the most. The odds of a US-China trade deal plunged, which means, if those don’t reverse, a new driver will be needed to keep stocks on their northerly path.

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 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 regarding 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.

For this current domestic “Buy” cycle, here’s how some our candidates have fared:

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 -8% point has been taken out in the “Off High” column. For more volatile sector ETFs, the trigger point is -10%.

3. Trend Tracking Indexes (TTIs)

Our Trend Tracking Indexes (TTIs) continued to pull back, as the major indexes slumped for the third day in a row. 

Here’s how we closed 11/21/2019:

Domestic TTI: +5.26% above its M/A (prior close +5.48%)—Buy signal effective 02/13/2019

International TTI: +3.35% above its M/A (prior close +3.51%)—Buy signal effective 10/29/2019

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 specified guidelines.

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