By J Clinton Hill, Capital Markets Strategist @ Hillbent.com
ETF Market Commentary
We now have a bifurcated stock market to complement our politically divided nation. How appropriate!
The Nasdaq-100 (QQQ), SP-500 (SPY) and Russell 2000 (IWM) are failing to maintain key short-term support levels and making new lows. Each index represents a broad spectrum of the equity market, i.e. Technology, Multi-National Blue-Chips and Small Caps. Then there is the Dow Jones Industrials (DIA), a basket of thirty stocks, consistently making new highs and holding its ground. So, what gives? I would like to address this since it is perplexing some investors.
Most of the advance in the Dow can be attributed to the leadership of its Financial (XLF) and Industrial (XLI) components, while Technology (VGT) and Healthcare (XLV) related issues have lagged. Market breadth, with respect to its 50-day moving average, remains bullish @ 66.7%. However, technical analysis of its 30 individual components shows that many of these leaders are hyperbolically overbought. Positive dollar volume inflows persist at a rate that is unsustainable and I suspect a correction is forthcoming.
Be careful. When giants crash, they shake the earth.
Lastly, it would be remiss of me not to mention some of today’s strong economic data. In terms of the business cycle, the economy continues to exhibit signs of being in an expansion phase. One can only imagine what it will look like once President Elect Donald Trump gets his hands on it to make it “Hugely Bigley Great” again. Yahoo!!! (and hopefully not like the stock, YHOO). See data summary below:
- Jobless Claims increased but the 4-week moving average barely budged and that is more significant.
- November’s Manufacturing PMI report @ 54.1 exceeded estimates and indicates an acceleration of the economic expansion.
- Construction Spending, especially residential, for October-2016 rose sharply, without even a hat tip to President Elect Donald Trump.
Signing off @ Hillbent… (Please refer to our ETF summary table below for a performance analysis of asset classes.)
|RS 1Yr||Exchange Traded Fund||Last||Chg||% Chg|
|99||DJ-30 Industrials (DIA)||191.90||0.50||0.26%|
|70||Emerging Mkts (EEM)||35.08||-0.42||-1.18%|
|34||Europe FTSE (VGK)||45.84||-0.07||-0.15%|
|67||Latin America 40 (ILF)||27.08||-1.03||-3.66%|
|87||Pacific Ex-Japan (EPP)||41.26||0.21||0.51%|
|86||FTSE China 25 (FXI)||37.59||0.00||0.00%|
|0||VIX Short-Term Futures (VXX)||27.98||0.07||0.25%|
|Major Equity Sectors|
|92||Consumer Discretionary (XLY)||81.89||0.04||0.05%|
|33||Consumer Staples (XLP)||50.25||-0.33||-0.65%|
|19||Real Estate (XLRE)||29.55||-0.46||-1.53%|
|84||Technology / Info (VGT)||117.43||-2.92||-2.43%|
|Bonds & Fixed Income|
|4||20+ Yr Treasury (TLT)||118.73||-1.27||-1.06%|
|4||Aggregate Bond Fund (AGG)||107.68||-0.36||-0.33%|
|46||Treasury Inflation Protection (TIP)||112.89||-0.33||-0.29%|
|27||Investop Corp Bond (LQD)||115.87||-0.65||-0.56%|
|78||High Yield Corp Bond (HYG)||84.87||-0.40||-0.47%|
|3||Pimco Intermed Muni Bonds (MUNI)||52.03||-0.25||-0.48%|
|6||High Yield Muni (HYD)||28.60||-0.03||-0.10%|
|90||US Dollar Bullish (UUP)||26.11||-0.14||-0.53%|
|12||Euro Trust (FXE)||103.63||0.65||0.63%|
|34||Japanese Yen Trust (FXY)||84.62||0.36||0.43%|
|97||DB Commodity Index (DBC)||15.49||0.28||1.84%|
|67||US Oil (USO)||11.33||0.40||3.66%|
|39||DJ Real Estate (IYR)||73.67||-1.18||-1.58%|
|64||DJ Home Construction (ITB)||27.01||-0.36||-1.32%|
|23||Residential Real Estate Index (REZ)||58.54||-0.99||-1.66%|
Signing off @ Hillbent…
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