By J Clinton Hill, Capital Markets Strategist @ Hillbent.com
ETF Market Commentary
Being void of any significant economic data, today’s performances were mixed at best. Typically, small-caps tend to be first in the line of fire when market fatigue appears. Such was not the case on Monday as the Russell 2000 (IWM) easily outperformed major domestic and international equity indexes. With that said, the IWM is very much overbought and vulnerable, so caution is warranted. Then again, perhaps Donald Trump will make this a “great market” for small-caps. On another note, while eking out a small gain, the Dow-30 Industrials (DIA) did manage to make another record high.
In terms of sector performance, two standouts were quite evident. Information Technology (VGT), after failing support at its 50-day moving average for the 2nd time in 2 weeks, lagged all others and continues to correct. Real Estate (XLRE) made its first legitimate attempt to find support and may be attempting a bullish reversal, thus ending its current price correction. However, it is premature to validate this move while it remains within a bearish channel.
10-Year treasury yields gapped up for their 3rd consecutive trading session. The rout in the bond market, e.g. 20+ Year Treasury (TLT), is likely to get worse before it gets better. Look for investors to continue selling bonds as the Fed Fund futures are increasingly biased towards a rate hike. Relative strength in the High Yield Muni (HYD) is also now in the low single digit area.
Confirming anticipation of higher rates is the US Dollar (UUP), which has soared more than 3% from its recent low on November 4th, 2016. Other major currencies have yielded the path to a stronger dollar as both the Euro (FXE) and Yen (FXY) violated key support levels in today’s trading.
Commodities may also be challenged by the resurgent strength in the Dollar. The DB Commodity Index (DBC) is struggling to hold support at its 200-day moving average, while Gold (GLD) and US Oil (USO) have all but abandoned these levels.
No further comments this evening. (Please refer to ETF summary table below for performance analysis .)
ETF Performance Summary
|RS 1Yr||ETFs (Nov-14-2016)||Last||Chg||% Chg|
|98||DJ-30 Industrials (DIA)||188.77||0.30||0.16%|
|63||Emerging Mkts (EEM)||34.30||-0.25||-0.72%|
|36||Europe FTSE (VGK)||46.04||-0.40||-0.86%|
|67||Latin America 40 (ILF)||27.19||-0.13||-0.48%|
|80||Pacific Ex-Japan (EPP)||40.59||-0.11||-0.27%|
|69||FTSE China 25 (FXI)||35.76||-0.22||-0.61%|
|1||VIX Short-Term Futures (VXX)||31.29||-0.15||-0.48%|
|Major Equity Sectors|
|82||Consumer Discretionary (XLY)||79.73||0.01||0.01%|
|36||Consumer Staples (XLP)||50.45||-0.09||-0.18%|
|28||Real Estate Sector (XLRE)||30.15||0.58||1.96%|
|85||Technology / Info (VGT)||117.12||-1.65||-1.39%|
|Bonds & Fixed Income|
|11||20+ Yr Treasury (TLT)||121.31||-0.73||-0.60%|
|21||Aggregate Bond Fund (AGG)||108.81||-0.44||-0.40%|
|51||Treasury Inflation Protection (TIP)||113.37||-0.88||-0.77%|
|41||Investop Corp Bond (LQD)||117.47||-0.61||-0.52%|
|72||High Yield Corp Bond (HYG)||84.09||0.62||0.74%|
|8||Pimco Intermed Muni Bonds (MUNI)||53.14||-0.24||-0.45%|
|4||High Yield Muni (HYD)||29.39||-0.72||-2.39%|
|86||US Dollar Bullish (UUP)||25.84||0.25||0.98%|
|10||Euro Trust (FXE)||104.35||-1.12||-1.06%|
|58||Japanese Yen Trust (FXY)||89.01||-1.36||-1.50%|
|69||DB Commodity Index (DBC)||14.38||-0.03||-0.21%|
|36||US Oil (USO)||9.87||0.10||1.02%|
|43||DJ Real Estate (IYR)||74.50||1.24||1.69%|
|63||DJ Home Construction (ITB)||26.90||0.37||1.39%|
|37||Residential Real Estate Index (REZ)||60.43||1.25||2.11%|
Signing off @ Hillbent…
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