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ETF Global Opportunities
Weekly analysis on US stocks, sectors, commodities and global indices.
13 December 2016
     

Market Overview

Internal health for the overall equity market in the U.S. has strengthened again, resuming its uptrend with the start of this month. The NYSE Bullish % is now testing 2 year highs. The indicator has sufficient overhead room to allow the market to extend higher into the first few months of 2017 at least.

This evidence supports the case for us maintaining a net long position in U.S. equity funds. Today we buy a further fund, the Consumer Staples as they are participate once again in the bull-market.

 

 

 


 

This Week's Trades

  • Consumer Staples (XLP) - Buying 

 

Note - Trades will be executed on today's close.

 


 

Other ETF Highlights

 

  • Dow Industrials (DIA) - Buy reiterated
  • NASDAQ 100 (QQQ) - Buy reiterated
  • Industrial (XLI) - Buy reiterated
  • Global Energy Index (IXC) - Buy
  • Social Media Index (SOCL) - Sell
  • Australia Index (EWA) - Buy
  • China A Share (CAF) - Sell
  • Euro Trust (FXE) - Avoid
  • United States Oil (USO) - Buy
  • US 20+years Treasury Bond (TLT) - Relative Sell

 


 

Analysis

 

US Equity Indices

 

The Dow Industrials fund is trading at a record high. However, the rally since early November is looking over extended, given the distance from the 200-day exponential moving average and the overbought 14-day RSI. A consolidation will be necessary soon and that could be used to gain entry.

 

 

The NASDAQ 100 ETF should soon follow the rest of the market and break out to fresh record highs. Presently the fund is consolidating at the top of its 5 month range. The 14-day RSI is at a comfortable level and should allow an extension to new record highs. Consider adding here.

 

 

US Sector Indices

 

The Consumer Staples ETF has recovered this month, attempting to resume its long-term up channel off the March 2009 low. This month's low could be used as a stoploss, $49.98. The P&F chart is expected to soon reverse back to the upside.

We shall open a long in the XLP on the close today. 

 

 

The Industrial sector ETF sits at record highs. There have been small one day pull-backs over the past few weeks and they have ensured a non-overbought condition. The rally looks set to extend into yearend.

Note the long-term uptrend on the P&F relative chart.

 

 

The Global Energy Index ETF moved to a new 52-week high yesterday, with some strength again today. The relative chart also trades around its 52-week highs.

The P&F chart shows a nearing test of 2014 trendline resistance. Breaking that would confirm the end of the 2014/2015 correction. 

 

The Social Media Index fund has been deteriorating on a price and relative basis since the start of October. Trading has just reversed down from resistance off the 50-day exponential moving average. The 14-day RSI is rolling over from neutral. Underperformance looks set to continue.

 

 

Other Developed Indices

 

The Australia Index ETF is breaking out to new 52-week highs. The chart is not overbought due to the back and forth action of recent weeks. 

Entry may be considered here ahead of further strength. 

 

 

 

 

Emerging Indices

 

The China A Share fund has been weak since September. The relative ratio, versus the U.S. market, is at lows for the year. The P&F relative chart shows a resumption of the long-term downtrend dating back to 2009. Weakness likely to continue.

 

 

 

Currencies

 

The Euro Trust is testing the bottom of its 2 year range, attempting to bottom. However, momentum, the 14-day RSI, is not oversold and that could allow the downtrend to soon reassert. Breaking $102 would be followed by a swift move down to $100. We would continue to avoid for the time being.

 

 

Commodities

 

The United States Oil fund is attempting to break through the top of its 8 month range. It has already cleared the 200-day exponential moving average. Momentum has the slack to allow an extension higher from here to at least $14. A stoploss could be placed at $11.

 

 

 

Bonds

 

The US 20+years Treasury Bond ETF is testing its low from a year ago. Further deterioration from here would put the 5 year up channel under severe pressure. 

With the P&F relative chart still trading at a long-term low, we would continue to avoid longs in the fund.

 

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 42.42 +16.35%
12 Jul 2016 ISHS Russell 2000 Index IWM Long 119.72 136.85 +14.31%
12 Jul 2016 iShares Dow Jones US Aerospace & Defense Index Fund ITA Long 127.66 143.47 +12.38%
12 Jul 2016 Semiconductor HOLDRS SMH Long 59.36 71.38 +20.25%
12 Jul 2016 iShares Taiwan Index EWT Long 29.04 31.19 +7.40%
19 Jul 2016 PowerShares QQQ QQQ Long 112.13 118.96 +6.09%
19 Jul 2016 SPDR Sector Trst Materials XLB Long 48.81 51.27 +5.04%
19 Jul 2016 SPDR Sector Trst Technology XLK Long 45.21 48.5 +7.28%
19 Jul 2016 iShares Hong Kong Index EWH Long 20.37 20.29 -0.39%
19 Jul 2016 Base Metals DBB Long 13.79 15.6 +13.13%
26 Jul 2016 iShares Brazil Index EWZ Long 32.57 32.43 -0.43%
2 Aug 2016 iShares GS Semiconductor Index SOXX Long 102.48 120.08 +17.17%
2 Aug 2016 iShares South Korea Index EWY Long 55.26 55.06 -0.36%
30 Aug 2016 iShares DJ US Broker-Dealers Index Fund IAI Long 41.8277 50.6 +20.97%
30 Aug 2016 iShares MSCI Emerging EEM Long 36.94 35.93 -2.73%
6 Sep 2016 iShares GS Software Index Fund IGV Long 113.91 111.92 -1.75%
6 Sep 2016 iShares Japan Index EWJ Long 50.12 50.75 +1.26%
13 Sep 2016 DJ US Regional Banks Index Fund IAT Long 35.24 45.02 +27.75%
8 Nov 2016 iShares DJ Transportation Average IYT Long 149.74 167.88 +12.11%
8 Nov 2016 streetTRACKS KBW Bank ETF KBE Long 34.94 43.4 +24.21%
22 Nov 2016 SPDR Sector Trst Industrial XLI Long 61.91 63.75 +2.97%
29 Nov 2016 Diamond Trust- 1/100 DJIA DIA Long 191.19 198.08 +3.60%
6 Dec 2016 iShares Switzerland Index EWL Long 28.85 28.98 +0.45%

ETF Trading (Long/Short) Shorts

Date Stock Code Type Open Price Current Price % P&L
6 Sep 2016 iShares Barclays US Treasury Inflation Protected Securities Fund TIP Short 116.14 112.78 +2.89%
13 Sep 2016 iShares S&P National Municipal Bond Fund MUB Short 112.63 107.7 +4.38%
4 Oct 2016 SPDR Sector Trst Utilities XLU Short 47.29 48.46 -2.47%
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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