Market/ETF Video – Macro Environment Dominates, Correlations Running High, Few Places to Hide (Premium)

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Market/ETF Review and Outlook Video

The macro environment continues to dominate as stocks moved opposite the Dollar and Treasury bonds. The Dollar Bullish ETF and 10-yr Treasury Yield turned back up the last four days and the S&P 500 fell sharply. The long-term trend for all three remains the same: stocks down, Dollar up and yields up. These long-term trends are the dominant forces at work and they are affecting most ETFs because only 10 of the 274 ETFs in the MasterList are in uptrends. In addition, only 10 of the 274 ETFs are showing gains since mid August. Positive correlations are through the roof and there are few places to hide right now.

Broad Market Notes

  • Composite Breadth Model Remains Bearish
  • Fed Balance Sheet Extends Contraction Trend
  • CCC and BBB Spreads Continue to Show Stress
  • Junk Bond ETF hits New Low 
  • TLT hits New Low as 10yr Yield Nears 4%
  • Dollar Bullish ETF Turns Up after Short Pullback
  • Oil Hits Resistance from Broken Support
  • Gold Forms Another Lower High (Downtrend)
  • DB Base Metals ETF in Long-term and Short-term Downtrend
  • DB Agriculture ETF Holds August Low and Slight Uptrend

ETF Trends, Patterns and Setups

  • Only 10 (3.6%) of 274 ETFs in Uptrends
  • Correlations Remain High the Last 4 and 40 Days
  • SPY Near New Low as QQQ Hits New Low (plus IWM)
  • High Beta and Low Volatility ETFs Hit New Lows (SPHB, SPLV)
  • Tech, Finance, Comms, Utes, Staples and REITs Lead Sectors with New Lows
  • New Lows for Semis, Software and Cyber-Security (short-term oversold)
  • Home Construction ETF Shows Short-term Relative Strength (ITB)
  • Biotech SPDR Holds after Normal Pullback (XBI, IBB)
  • Aerospace & Defense ETFs Surge and Consolidate (PPA, ITA)
  • Clean Energy ETFs Affected by Bear Market (TAN, QCLN, ACES)
  • Crude Oil Hits Resistance at Broken Support (CL1!, DBE, DBC)
  • Energy ETFs Hit Short-term Resistance Zones (XLE, FCG, XOP)
  • Wheat Lifts DB Agriculture ETF (WEAT, DBA)
  • Corn Remains Strong as Soybeans Weaken (CORN, SOYB)
  • Coffee ETF Struggles to Hold Breakout (JO)
Thanks for tuning in and have a great day!

-Arthur Hill, CMT
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