Russell 2000 ETF Market Shows Weaker Stock Investor Appetite

Posted on Posted in Views From The Hill

By J Clinton Hill, Capital Markets Strategist @ Hillbent.com

ETF Market Commentary

View from the Hill, ETF Market CommentarySo, shall we begin? Investors appeared to show signs of a sated appetite for US equities. Small-cap stocks, as represented by the Russell-2000 (IWM), fared 3 to 4 times worse than their larger-cap brethren. Energy (XLE) was also a significant pocket of weakness in the market, as it made a new 5-day low and succumbed to higher than its average-final-hour-trading volume, in case you are looking for more clues.

Under such uncertain circumstances, bonds, e.g. 20+ Year Treasury Fund (TLT), can and did perform relatively well. I have mentioned in previous posts that 10-year treasury yields were approaching key resistance levels so this bounce should be no surprise. Nevertheless, I am still bearish towards bonds as the fundamental outlook for rates is higher.

Getting back to stocks, Trump’s post-election rally has become an over-crowded trade and leaves very little wiggle room for margins of error when it comes to valuations. Of course, it takes more than one day to initiate a wave of selling. Taking out near-term support levels or overwhelmingly bearish breadth of new 5-day lows might be the tipping point the bears need to regain control. The longer-term trends in the market are bullish, so one will have to stay with shorter time frames if given to tactical vs. strategic deployment of capital.

Monday’s light economic calendar, void of any major data, did not help to counter selling. Tuesday will be just the opposite as we have the release of three key economic news:

  1. Economic Growth: US GDP for 3Q-2016
  2. Residential Real Estate: Case-Shiller Home Price Index for September-2016
  3. Consumer Activity: US Consumer Confidence Index for November-2016

In summary, today was more of a reaction to some doubts surrounding Black Friday’s retail sales over the holiday weekend and also include sentiment toward Cyber Monday. Until more comprehensive details are disclosed, the mass psychology of human nature leans toward pessimism.

 

(Please refer to our ETF summary table below for a performance analysis of asset classes.) Signing off @ Hillbent…

 


View From the Hill ETF Performance

 

RS 1Yr Exchange Traded Fund Last Chg % Chg
  Equities  
98 DJ-30 Industrials (DIA) 190.78 -0.52 -0.27%
97 SP-500 (SPY) 220.48 -1.04 -0.47%
95 Nasdaq-100 (QQQ) 118.53 -0.27 -0.23%
96 Russell-2k (IWM) 132.33 -1.74 -1.30%
53 EAFE (EFA) 56.49 -0.30 -0.53%
73 Emerging Mkts (EEM) 35.39 0.14 0.40%
31 Europe FTSE (VGK) 45.54 -0.54 -1.17%
75 Latin America 40 (ILF) 28.24 0.44 1.58%
78 Brazil (EWZ) 33.91 0.85 2.57%
6 Japan (EWJ) 49.92 0.43 0.87%
87 Pacific Ex-Japan (EPP) 41.27 -0.12 -0.29%
82 FTSE China 25 (FXI) 37.23 0.14 0.38%
0 VIX Short-Term Futures (VXX) 27.98 0.07 0.25%
     
  Major Equity Sectors  
95 Consumer Discretionary (XLY) 82.32 -0.66 -0.80%
46 Consumer Staples (XLP) 51.33 0.11 0.21%
93 Energy (XLE) 71.71 -1.01 -1.39%
54 Financials (XLF) 22.15 -0.26 -1.16%
47 Healthcare (XLV) 68.96 -0.52 -0.75%
97 Industrials (XLI) 62.28 -0.43 -0.69%
98 Materials (XLB) 49.36 -0.20 -0.40%
28 Real Estate (XLRE) 30.17 0.11 0.37%
98 Technology / Info (VGT) 121.54 -0.11 -0.09%
78 Telecom (IYZ) 32.64 0.06 0.18%
57 Utilities (XLU) 48.07 0.91 1.93%
     
  Bonds & Fixed Income  
11 20+ Yr Treasury (TLT) 121.71 0.89 0.74%
17 Aggregate Bond Fund (AGG) 108.55 0.38 0.35%
50 Treasury Inflation Protection (TIP) 113.29 0.17 0.15%
38 Investop Corp Bond (LQD) 117.12 0.53 0.45%
85 High Yield Corp Bond (HYG) 85.72 -0.01 -0.01%
17 Pimco Intermed Muni Bonds (MUNI) 52.89 0.52 0.99%
6 High Yield Muni (HYD) 29.30 -0.05 -0.17%
     
  Currencies  
92 US Dollar Bullish (UUP) 26.17 -0.07 -0.27%
7 Euro Trust (FXE) 103.11 0.14 0.14%
42 Japanese Yen Trust (FXY) 86.09 0.88 1.03%
     
  Commodities  
86 DB Commodity Index (DBC) 15.06 0.05 0.33%
44 Gold (GLD) 113.80 1.19 1.06%
50 US Oil (USO) 10.44 0.11 1.06%
     
  Real Estate  
47 DJ Real Estate (IYR) 75.18 0.26 0.35%
73 DJ Home Construction (ITB) 27.72 -0.29 -1.04%
31 Residential Real Estate Index (REZ) 59.60 0.54 0.91%

 

Signing off @ Hillbent…

 

(For more a more detailed and extensive coverage of ETFs, please refer to our premium research service, ETF LookOut Points.)

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