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ETF Global Opportunities

17 May 2018
     

Market Overview

 

Medium-term breadth for the equity market remains flat. The NYSE Bullish % is close to neutral and has not confirmed the recent rally by the equity market. Consequently, caution is still advised on equity funds until an internal improvement is shown. 

This afternoon we shall sell into the May market bounce, adding shorts in three equity funds.

 

 


 

This Week's Trades

  • Dow Industrials (DIA) - shorting
  • DJ Transportation Average (IYT) - shorting
  • Italy Index (EWI) - shorting

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

 

 


 

Analysis

 

US Equity Indices

 

The Dow Industrials ETF has encountered resistance from its April peak. Momentum has corrected from oversold. The fund looks set for a return to its 200-day exponential moving average. 

The fund has underperformed since January against the S&P 500. We shall use recent strength to go short DIA on the close today.

 

 

 

 

US Sector Indices

 

The DJ Transportation Average fund this month rallied as far as peaks in March and April, resistance. Trading is likely to turn down from here to resume range trading, dropping back down to the 200-day exponential moving average. The 14-day RSI has room to fall.

The fund has underperformed since January. A short will be opened in IYT on the close today.

 

 

 

Other Developed Indices

 

The Italy Index fund is retreating from the $34 level, resistance from January. The P&F chart shows that ceiling dates all the way back to 2009. 

The relative ratio, versus the U.S. market, has deteriorated sharply this month. 

A short in EWI will be opened on the close today. 

 

 

 

Emerging Indices

 

The Brazil Index ETF is correcting on a price and relative basis this month. The move could deepen, down as far as rising trendline support at $35. Breaching that line would resume the longer down trend. 

 

 

 

Currencies

 

The Euro Trust has accelerated to the downside the past week, reasserting the correction off the January high. With the 200-day exponential moving average broken, the pull-back will likely deepen. 

The relative ratio versus the equity market is trading around 52-week lows.

 

 

 

Commodities

 

The Livestock fund remains in medium-term and long-term downtrends. The oversold bounce off the early April low looks complete as the price rolls over again. The 14-day RSI has room to allow an extension lower, to fresh all-time lows. 

 

 

 

Bonds

 

The 7-10 year T-Bond fund is reasserting price and relative downtrends following the March correction into its falling 50-day exponential moving average. 

Further weakness expected. The P&F chart shows the next downside level to watch is trendline support at $97.

 

MODEL PORTFOLIO

ETF Trading (Long/Short) Longs

Date Stock Code Type Open Price Current Price % P&L
30 Aug 2016 iShares DJ US Broker-Dealers Index Fund IAI Long 41.8277 68.38 +63.48%
16 Jan 2018 iShares MSCI Emerging EEM Long 49.32 47.18 -4.34%
26 Feb 2018 SPDR Sector Trst Utilities XLU Long 50.2 49.38 -1.63%

ETF Trading (Long/Short) Shorts

Date Stock Code Type Open Price Current Price % P&L
14 Feb 2017 Livestock COWTF Short 22.16 20.93 +5.55%
5 Feb 2018 ISHS Russell 2000 Index IWM Short 147.92 160.92 -8.79%
12 Feb 2018 iShares S&P Europe 350 Index IEV Short 46.7 47.96 -2.70%
20 Feb 2018 Agriculture ETF DBA Short 18.98 18.77 +1.11%
20 Feb 2018 Market Vectors Russia ETF RSX Short 23.09 21.68 +6.11%
5 Mar 2018 US Investment Grade Crp LQD Short 116.21 114.03 +1.88%
5 Mar 2018 iShares United Kingdom Index EWU Short 34.6 36.88 -6.59%
20 Mar 2018 iShares South Korea Index EWY Short 75.85 73.65 +2.90%
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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