Staging A Comeback

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]
  1. Moving the markets

No matter what the news headlines say about the coronavirus, investors seem to look past it and find another area to focus on. That was the case today, with potential disruptions to global economies being pushed on the back burner, while positive earnings moved back to the front.

Earnings numbers overall have been relatively strong and have come in slightly better than expected, while forward guidance has so far not presented any sudden negative surprises.

Of course, expectations for the Fed to do whatever is necessary to prop up the economy by maintaining loose financial conditions, has been the backbone supporting equities.

Still, the coronavirus and its global impact will remain on top of the list, despite the Fed’s liquidity support to boost stock valuations. After all, a prolonged disturbance of the global supply chain will have dire consequences on market direction, no matter how “accommodative” the Fed is willing to be.

In the meantime, we saw another rally into record high territory by the S&P 500 and the Nasdaq, and that despite these facts, according to ZH: “More quarantines, more cases, more deaths and more uncertainty about whether any production is back online.”

Go figure…

2. ETFs in the Spotlight

In case you missed the announcement and description of this section, you can 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:

Click image to enlarge

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) recovered from Friday’s sell off and inched higher.

Here’s how we closed 02/10/2020:

Domestic TTI: +7.51% above its M/A (prior close +7.05%)—Buy signal effective 02/13/2019

International TTI: +5.29% above its M/A (prior close +5.26%)—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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