[Chart courtesy of MarketWatch.com]

1. Moving the markets

It was choppy trading session with the major indexes hugging their respective trend lines throughout the day. Neither big dips nor strong rallies were to be seen anywhere, as momentum in either direction was conspicuously absent.

Part of this uncertainty may have been caused by a winding down of the earnings season and nervousness about a flood of important data points scheduled to be published later this week. On deck, we have the U.S. CPI index and a look at the Q4 GDP in Germany, which is suspected to confirm a slowdown in activity.

This is followed by releases of trade, credit and CPI data in China, as well as GDP in the U.K., while the wait for Brexit goes on. Other headlines suggest a U.S. government shutdown as early as Friday, until which time we will still be facing the remainder of the earnings releases.

In the end, it was a mixed day that had no effect on our current view that we need to have more upside confirmation to generate a new domestic ‘Buy’ signal.

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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 109 (last week 111) 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.

ETF Tracker StatSheet

https://www.theetfbully.com/2019/02/weekly-statsheet-for-the-etf-tracker-newsletter-updated-through-02-07-2019/

Battling Back And Finishing Mixed

[Chart courtesy of MarketWatch.com]

1. Moving the markets

For the second day in a row, the markets opened in red with the Dow down over 200 points, as yesterday’s issues (sluggish global growth and U.S.-China trade tensions) weighed heavy on sentiment.

Especially the trade war was on traders’ minds, when Trump confirmed that he had no plans to meet with Chinese President Xi before a March 1 deadline. However, rumors have it that the tariff increase was reduce to “only” 10% rather than the scheduled 25%.

That helped the markets to crawl back and trim the early losses with the S&P 500 and Nasdaq conquering the unchanged line thanks to a last 30 minute “shove” into the green. For the week, the S&P ended just about unchanged. That’s amazing when you consider that forward earnings expectations are continuing to plunge yet equities manage to hold on.

Technically speaking, the S&P 500 needs to conquer its 200-day M/A in order to provide some impetus for the bulls to keep pushing to higher levels. Without it, we may be stuck in a trading range for a while until a break, either up or down, occurs that will determine future market direction.

With the Fed now being on the side of Wall Street, after having brushed anticipated rate hikes aside, my current guess is that we are heading higher; it’s just a matter of ‘when.’

Such a move will very likely get us back in the market again, since our Domestic TT is already tightly hovering around its trend line, which is the divider between bullish and bearish territory. Stay tuned…

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ETF Data updated through Thursday, February 7, 2019

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: SELL — since 11/15/2018

Click on chart to enlarge

Our main directional indicator, the Domestic Trend Tracking Index (TTI-green line in the above chart) is now positioned below its long-term trend line (red) by -0.06% after having generated a new Domestic “Sell” signal effective 11/15/18 as posted.

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[Chart courtesy of MarketWatch.com]

1. Moving the markets

Right after the opening bell, the major indexes took a dive as a cocktail of global risks kept traders occupied. The usual suspects, namely U.S.-China trade tensions, the U.K Brexit and a sharp slowdown in Chinese growth, combined to put the bulls on notice that all may not be well with this world and south we went.

Considering the strength of the recent bear market rally, the pullback was not significant, however, it could indicate that bearish forces could come into play again. Poor earnings and weak data out of Germany put their markets on a southerly course, as algos and traders desperately looked in vain for positive headlines. Concerns spread that the slowing growth in China has already affected the European Union.

In the end, the pullback was enough to change the position of our Domestic Trend Tacking Index (TTI), which had crawled above its long-term trend 4 days ago. Today’s market drop was sharp enough to push our index back below the line into bear market territory by a tiny margin (section 3). So, we’re on hold and will not take any action until a clear break to the upside has occurred again and is accompanied by some staying power.

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[Chart courtesy of MarketWatch.com]

1. Moving the markets

I guess nothing can ever really satisfy the traders/algos on Wall Street, who constantly need to be fed a fresh dose of stimulus in order to maintain the bullish mood. Apparently, it’s not enough that the Fed threw in the towel by doing a U-turn with their interest rate policy and in the process becoming Wall Street’s lapdog.

So, much was expected from the State of the Union address in terms of new details on the economic agenda or a concrete solution to the China trade disagreements. With no specifics forthcoming, the markets slipped a bit with the major indexes closing in the red by a small margin for the first time in 6 sessions.

Technically speaking, the S&P 500 is facing stiff overhead resistance as it approaches its 200-day M/A. As of today, it’s only 12 points away from cracking this barrier and moving back onto the bullish side. For the second day in a row, the index was unable to make the break.

However, once it conquers that line, it’s not a guarantee that it will be free sailing from then on. As this chart shows (courtesy of Global Market Monitor), the last 3 times this occurred, it turned into a regrettable head fake that head the bears chomping at the bit.

To me, the markets seem out of touch with reality, especially when considering that earnings are one of the main economic drivers that attempt to justify the current lofty levels. Forward earning expectations continue to slip and have now crashed to a 6-month low. Go figure…

Our Trend Tracking Indexes (TTIs) retreaded a tad, but the Domestic one remains above its long-term trend line. A little more staying power is needed, before I will issue a new Domestic ‘Buy’ signal.

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