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Weekly analysis on US stocks, sectors, commodities and global indices.
21 February 2017
     

Market Overview

 

Although short-term indicators are entering overbought, the medium-term indicator condition remains attractive. Should short-term indicators need to unwind in a small correction, then the weakness should prove to be an entry opportunity. 

The NYSE Bullish % reflects well the stable condition of the market. It is trending higher yet not overstretched to the upside. The highs from 2012/2013 are still a few boxes away and the highs from 2009/2010 are even higher. 

We remain net long domestic equity funds.

 

 


 

This Week's Trades

  • None

 


 

Other ETF Highlights

 

  • S&P 500 - Buy
  • Consumer Discretionary - Buy
  • Technology - Buy reiterated
  • Semiconductor Index - Buy reiterated
  • Germany - Buy
  • Pacific ex-Japan - Buy
  • Mexico Index - Sell
  • Euro Trust - Sell
  • Natural Gas - Sell
  • US 20 year Bond - Sell

 


 

Analysis

 

US Equity Indices

 

The S&P 500 ETF closed at a record high at the end of last week, extending its sharp rally off the low from November last year. The MACD momentum indicator has a little room to go before reaching the high from December and that will allow further near-term strength by the index.

 

 

 

US Sector Indices

 

The Consumer Discretionary sector finished close to its recent all-time high at the end of last week. The price chart shows a strong and steady long-term uptrend.

The P&F relative chart is yet to turn up but it is in a good position to do so soon. The pull-back off the November high is of the same depth as the retreat a year previously.

 

The Technology sector ETF closed at a 15 year high last week. The rally should extend over the medium-term although entry should ideally be sought on the next pull-back. 

The P&F relative chart has been basing for the past decade. 

 

The Semiconductor Index also finished at a record high last week. Price and relative uptrends are both strong. Watch to add on the next shallow pull-back.

 

 

Other Developed Indices

 

The Germany fund is steadily resuming its rally off the November 2016 low. Sufficient room on the 14-day RSI to allow a breakout to new 52-week highs over the short-term.

The P&F chart illustrates clearly that the long-term uptrend since 2009 has been up.

 

 

The Pacific ex-Japan fund is breaking out to new 52-week highs. Near-term the chart is slightly overbought, evident from the 14-day RSI turning down from 80. Any weakness is a buying opportunity. 

The P&F chart shows a rally underway off the lower end of a 6 year range. That move could continue in the months ahead, all the way up to the top of the range at $50.

 

 

Emerging Indices

 

The Mexico Index ETF is struggling to resume its rally off the January low and break through resistance from the 200-day exponential moving average. Momentum may also be rolling back to the downside. Certainly the relative ratio, versus the U.S. market, is reasserting its yearlong downtrend. We would be sellers here on the possibility of new lows.

 

Currencies

 

The Euro Trust appears to be reasserting its downtrend following an encounter with resistance earlier this month from the falling 100-day exponential moving average. The 14-day RSI has just turned down from neutral. Potential for new 52-week lows in a few weeks time. Shorts could position a stop just above the 50-day.

 

 

 

Commodities

 

The P&F price and relative charts for Natural Gas have both reasserted their long-term downtrends this month. New 52-week lows are likely in several weeks time. 

 

 

Bonds

 

The US 20 year Bond fund remains in its downtrend off the early July 2016 high. The falling 50-day exponential moving average continues to serve resistance. Expecting a downtrend reassertion soon. Shorts could position a stoploss just above this month's high ($122.27).

The P&F relative chart reflects long-term underperformance.

 

MODEL PORTFOLIO

ETF Trading (Long/Short) Longs

Date Stock Code Type Open Price Current Price % P&L
26 Apr 2016 Sugar SGG Long 36.46 45.25 +24.11%
12 Jul 2016 ISHS Russell 2000 Index IWM Long 119.72 139.11 +16.20%
12 Jul 2016 iShares Dow Jones US Aerospace & Defense Index Fund ITA Long 127.66 150.35 +17.77%
12 Jul 2016 Semiconductor HOLDRS SMH Long 59.36 77.09 +29.87%
19 Jul 2016 PowerShares QQQ QQQ Long 112.13 129.81 +15.77%
19 Jul 2016 SPDR Sector Trst Materials XLB Long 48.81 52.3 +7.15%
19 Jul 2016 SPDR Sector Trst Technology XLK Long 45.21 52.19 +15.44%
19 Jul 2016 Base Metals DBB Long 13.79 16.37 +18.71%
26 Jul 2016 iShares Brazil Index EWZ Long 32.57 39.24 +20.48%
2 Aug 2016 iShares GS Semiconductor Index SOXX Long 102.48 132.27 +29.07%
30 Aug 2016 iShares DJ US Broker-Dealers Index Fund IAI Long 41.8277 53.35 +27.55%
6 Sep 2016 iShares GS Software Index Fund IGV Long 113.91 123.38 +8.31%
6 Sep 2016 iShares Japan Index EWJ Long 50.12 51.19 +2.13%
13 Sep 2016 DJ US Regional Banks Index Fund IAT Long 35.24 47.62 +35.13%
8 Nov 2016 iShares DJ Transportation Average IYT Long 149.74 171.17 +14.31%
8 Nov 2016 streetTRACKS KBW Bank ETF KBE Long 34.94 45.32 +29.71%
22 Nov 2016 SPDR Sector Trst Industrial XLI Long 61.91 65.89 +6.43%
29 Nov 2016 Diamond Trust- 1/100 DJIA DIA Long 191.19 205.88 +7.68%
6 Dec 2016 iShares Switzerland Index EWL Long 28.85 31.05 +7.63%
10 Jan 2017 SPDR Sector Trst Health Care XLV Long 71.5 73.66 +3.02%

ETF Trading (Long/Short) Shorts

Date Stock Code Type Open Price Current Price % P&L
13 Sep 2016 iShares S&P National Municipal Bond Fund MUB Short 112.63 108.3 +3.84%
4 Oct 2016 SPDR Sector Trst Utilities XLU Short 47.29 49.57 -4.82%
14 Feb 2017 Livestock COW Short 22.16 22.24 -0.36%
Model Portfolio Notes
Opening of positions – Positions are opened on the immediate closing price following the report.
 
Stops - Two flash crashes (2010, 2015) and occasional bad prices have forced us to drop strict stops. Positons will no longer be stopped out but we shall suggest a region as to where we MAY exit. 
 
Closures - With positions not being stopped out, we shall only exit positions via advice in the report. When we exit a trade, the next closing price is used. 
 
Allocation – Each trade is allocated 5% of the portfolio.
 
 
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