Ready Yourself for 2024 With Macro to Micro Analysis

For the new year, we have given you an extensive 3-pronged look at the markets.

First, we have the general outlook for the economy and markets through the Outlook 2024. This is the general outlook for 2024, including the recap of 2023 and how the predictions I made then played out. It includes a comparison in inflation and disinflation patterns of the 1970s and now. It also includes all the indices and the general outlook for key sectors and the bonds, dollar, metals, and so on.

Moreover, we look at the Economic Modern Family and their outliers through charts and analysis. Also included are overall trends to watch, plus picks.

One other area I cover in the Outlook 2024 is the teachings of Raymond Lo and how he sees the upcoming Year of the Dragon. Part of my comments on his analysis is based on this statement by Lo:

“Many has the misunderstanding that the Dragon is glamorous auspicious animal and will always bring good luck. To the contrary, Dragon and Dog in the 12-animal system is called the “Gate to Heaven and Hell” or the “Net of Heaven and Hell”.

General Thoughts

2024 could see gains; however, we are agnostic and definitely looking to charts. SPY needs to hold 4600 as our line in the sand, and small caps need to hold over 2000. Plus, in January, we will have a 6-month calendar reset this year with the election; instruments that fail the calendar range lows could set the stage for a broader selloff, while instruments that rally above the calendar range highs can be the bigger winners, at least for the first half of the year. Nonetheless, we have keen eyes on junk bonds, which, despite rallying, have well underperformed the indices. If they hold, great; if not, we take that as a warning.

With the anticipation of Fed lowering rates multiple times, we also want to see Fed Fund rates stabilize and not fall too dramatically, as those could be the signs of recession that we seemingly avoided in 2023. Additionally, we expounded with Daily newsletters.

From Gold and Silver

For last year’s Outlook, I wrote:

Perhaps our biggest callout for a major rally in 2023 is in gold.

Here we are over $2000 and, although gold has not doubled in price, it did rise by 25%.

For 2024, we stay with our call for higher gold prices. I am looking for a move to $2400, provided gold continues to hold $1980.

That statement was from December 1st. To add to that statement:

Trends for 2024 — Gold and Silver start their Last Hurrah.

From 17 Predictions

With certain areas of inflation coming down, although still higher than what numbers suggest, the discussion of the rate hike cycle at the end is controversial. Statistically, there has been a major financial failure at the end of each rate hike cycle since 1965.

Currently, the catalyst for financial stress could be the rising debt, rising spending, geopolitical issues impacting supply chain and a contentious election year. And anything that gooses inflation will stop the Fed from cutting.

January 2024 will see a new 6-month calendar range reset — it will be very important this time, with many predicting the end of the first quarter with a selloff. Although the stats are on the side of a higher market, this year of the dragon suggests some irritation that could turn the market on its side with more volatility.

To be prepared check out our predictions.

From The Vanity Trade 2024: All About Me!

According to Wikipedia, “Self-help or self-improvement is a self-directed improvement of oneself—economically, physically, intellectually, or emotionally—often with a substantial psychological basis.”

In the Outlook 2024, I quote Raymond Lo yet again,

“The Dragon is considered a ‘Star of Arts.’ The industries that will perform better in the Year of the Dragon will be related to the Metal and Wood elements. Metal industries are beauty and skin care; wood industries are media, fashion….”

This got me thinking about the consumer and the habits of 2023 and how they could continue or change in 2024.

With disposable income still quite high, consumers who spent the last half of 2023 in YOLO or revenge spending go into vanity mode in 2024.

Fashion, beauty, skincare, elective surgeries, self-help, diet drugs, and maybe dating stocks do well.

This daily includes lots of picks to put on your radar.


Click this link to get your free copy of the Outlook 2024 and stay in the loop!

Thank you, all my loyal readers, followers, clients and colleagues, for making 2023 so successful. Here is to a VERY HEALTHY, HAPPY and PROSPEROUS NEW YEAR!!!


This is for educational purposes only. Trading comes with risk.

If you find it difficult to execute the MarketGauge strategies or would like to explore how we can do it for you, please email Ben Scheibe at [email protected], our Head of Institutional Sales. Cell: 612-518-2482.

For more detailed trading information about our blended models, tools and trader education courses, contact Rob Quinn, our Chief Strategy Consultant, to learn more.

Traders World Fintech Awards

Get your copy of Plant Your Money Tree: A Guide to Growing Your Wealth.

Grow your wealth today and plant your money tree!

“I grew my money tree and so can you!” – Mish Schneider

Follow Mish on X @marketminute for stock picks and more. Follow Mish on Instagram (mishschneider) for daily morning videos. To see updated media clips, click here.


Mish and team look at 2023 and make several predictions on commodities and trends for 2024 and vanity stocks in Benzinga Pre Market Prep.

Mish discusses gold, silver and why self care and “all about me” can trend in 2024 in this video from Yahoo! Finance.


Coming Up:

January 2: The Final Bar with David Keller, StockCharts TV & Making Money with Charles Payne, Fox Business & BNN Bloomberg

January 3: Real Vision IP Group Special Presentation

January 5: Daily Briefing, Real Vision

January 22: Your Daily Five, StockCharts TV

January 24: Yahoo! Finance

Weekly: Business First AM, CMC Markets


  • S&P 500 (SPY): 480 all-time highs, 460 underlying support.
  • Russell 2000 (IWM): 200 pivotal.
  • Dow (DIA): Needs to hold 370.
  • Nasdaq (QQQ): 410 pivotal.
  • Regional Banks (KRE): 47 support, 55 resistance.
  • Semiconductors (SMH): 174 pivotal support to hold this month.
  • Transportation (IYT): Needs to hold 250.
  • Biotechnology (IBB): 130 pivotal support.
  • Retail (XRT): The longer this stays over 70.00 the better!

Mish Schneider

MarketGauge.com

Director of Trading Research and Education



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#Ready #Macro #Micro #Analysis

These ETF strategies won big in 2023. How one analyst sees them doing next year.

Hello! This is MarketWatch reporter Isabel Wang bringing you this week’s ETF Wrap. In this week’s edition, we look at ETF strategies that have exploded in popularity in 2023, and whether they will continue to gain momentum in the year ahead.

Please send tips or feedback to [email protected] or to [email protected]. You can also follow me on X at @Isabelxwang and find Christine at @CIdzelis.

Sign up here for our weekly ETF Wrap.

U.S. exchange-traded funds have had a strong 2023, attracting around $580 billion in net inflows with assets climbing to a record $8.1 trillion as of December 27, according to FactSet data.

ETFs tracking the large-cap benchmark S&P 500 index
SPX,
which has risen 24.6% this year, have seen the strongest net inflows in 2023 among the nearly 700 funds MarketWatch tracks, according to FactSet data.

The SPDR S&P 500 ETF Trust
SPY,
the world’s largest and oldest ETF with $493 billion assets under management, has recorded the largest net inflows of over $47 billion this year to date, followed by the Vanguard S&P 500 ETF’s
VOO
$41 billion and the iShares Core S&P 500 ETF’s
IVV
$36 billion over the same period, according to FactSet data. 

In terms of year-to-date performance, technology-related stock funds have shown a remarkable turnaround in 2023 after facing a tumultuous bear market the year before. Some of the ETFs tracking the tech-heavy Nasdaq 100 index
NDX
as well as semiconductor stocks are on pace to finish 2023 with gains of more than 50%, thanks to the rise of the “Magnificent Seven” stocks.

The Fidelity Blue-Chip Growth ETF
FBCG
has jumped 58.7% in 2023 to become the best-performing U.S. fund, excluding ETNs and leveraged products, according to FactSet data. The WisdomTree U.S. Quality Growth Fund
QGRW
is up 56.2% this year, while the Invesco QQQ Trust Series I
QQQ
has risen 55.6% in 2023. Gains in all of these funds were fueled by a massive rally in mega-cap technology stocks such as Apple Inc.
AAPL,
+0.22%

and Nvidia Corp.
NVDA,
+0.21%
,
which have surged 49% and 239% this year, respectively, according to FactSet data. 

Will these ETF strategies continue to thrive in 2024? Will others emerge to deliver greater returns next year? Here’s how one CFRA ETF analyst sees things shaping up in the new year. 

Tech-driven growth ETFs will continue to stand out in 2024

The recent strong performance of technology and growth-driven ETFs is likely to continue in 2024, although with higher volatility, according to Aniket Ullal, senior vice president and head of ETF data and analytics at CFRA. 

The table below summarizes the best performing ETF sub-categories in 2023, excluding leveraged and inverse ETFs. The best ETF sectors have featured tech- and growth-related themes like fintech, cryptocurrency, semiconductors, software and the metaverse. “These themes are very likely to continue to have a strong year in 2024,” said Ullal.

SOURCE: CFRA ETF DATABASE, DATA AS OF DECEMBER 18, 2023

One concern for investors is whether ETFs linked to technology sectors can continue to appreciate in 2024. But CFRA’s analysts think that some of the largest tech firms have strong balance sheets and cash flows, so they should be “safe havens” with “a growth tilt” next year.

“Despite the AI-driven recent run-up, the tech sector is still growing into its multiple, and ETFs like the Technology Select Sector SPDR Fund
XLK
do not yet have frothy multiples,” Ullal said in a Friday client note. 

See: ‘Magnificent Seven’ up for another bull run? What to expect from technology stocks in 2024.

Meanwhile, the massive amounts of cash parked at U.S. money-market funds could also keep the bull-market rally chugging along next year.

As of December 20, there was still $5.9 trillion sitting in U.S. money-market funds, according to data compiled by the Investment Company Institute. But given the stock-market rally in 2023 and the “likely pivot” to interest-rate cuts next year by the Federal Reserve, Ullal and his team see investors moving money out of cash-like instruments and migrating back to 60/40 portfolios by increasing their equity exposure next year, he wrote. 

Continued growth in options-based ETFs

ETFs using options-based strategies, such as covered-call ETFs or defined-outcome ETFs, have exploded in popularity in 2023. They have “long-term staying power” in sustaining investor interest in the year ahead, said Ullal. 

Specifically, the largest U.S. covered-call ETF, the $31 billion JPMorgan Equity Premium Income ETF
JEPI,
has seen $13 billion in net inflows so far this year and is among the top-five funds attracting the most capital in 2023, according to FactSet data.

A covered-call ETF, or an option-income ETF, is a fund that uses an options strategy called covered-call writing to generate income through collecting premiums. In a covered-call trade, investors sell a call option on an asset they hold, which gives the buyer of the option the right, not the obligation, to purchase the asset from them at a specified “strike” price on or before a certain date.

When the price of the asset goes down and doesn’t reach the “strike” price before the expiration date, the call option will expire as buyers walk away, but investors could still keep the premium as their payout.

That’s why the covered-call strategy usually performs well in a sideways or choppy market environment, because investors will be compensated for giving up the upside in stocks with a higher options premium. 

More on covered-call ETF: This type of ETF is designed to hedge against volatility and help investors navigate a stormy stock market

Ullal attributed the growing popularity of options-based ETFs to the success of JEPI as well as ETF firms relentlessly expanding their covered-call and buffer-ETF suites in 2023, even though these strategies tend to underperform in a rapidly rising stock market. 

“The flows are probably moderate [in 2024] relative to what we’ve seen so far, but I don’t think the flows will be negative or this category will go away,” Ullal said in a follow-up interview with MarketWatch on Thursday. “What’s happening is there are investors who are willing to trade off or sacrifice some [stock] performance for income or downside protection.” 

With that backdrop, Ullal sees options-based ETF strategies continuing to grow in 2024, though they will be put to the test if the current bull-market trend continues. 

Also see: An ETF that can’t go down? This new ‘buffer’ fund is designed to provide 100% protection against stock-market losses

Emerging-markets ETFs without China-related drag

ETF investors may want to “unbundle” their emerging-market exposure by reconsidering China-related assets in their ETF portfolios, according to Ullal.

Having a high exposure to China in emerging-market holdings was challenging for ETF investors in 2023, as China significantly underperformed other emerging markets this year due to a slower-than-anticipated post-Covid economic recovery, weakness in the country’s property sector and geopolitical tensions with the U.S., Ullal said.

China exposure in two of the most popular emerging-market ETFs, the Vanguard FTSE Emerging Markets ETF
VWO
and the iShares Core MSCI Emerging Markets ETF
IEMG,
stands at 31% and 24.4%, respectively, according to FactSet data. In turn, VWO has risen 8.3% this year, while IEMG has climbed 10.7% in 2023.

Meanwhile, the SPDR S&P China ETF
GXC
has slumped 12.8% year to date, per FactSet data. But the iShares MSCI Emerging Markets ex China ETF
EMXC,
which has no China exposure, has advanced 18.9% over the same period.

One option for investors would be to calibrate their exposure by combining emerging-market ex-China ETFs like EMXC with China-focused ETFs, Ullal said.

Alternatively, investors could construct the EM sleeve of their portfolios with country-specific ETFs, or use active ETFs like the KraneShares Dynamic Emerging Markets Strategy ETF
KEM,
as that fund’s China exposure is dynamically adjusted based on fundamental, valuation, and technical signals, he added.

Rising demand and competition in active bond ETF category 

The U.S. fixed-income ETF sector is dominated by funds passively tracking Treasury bonds like the 10-year Treasury note
BX:TMUBMUSD10Y,
which has seen declining yields lately as discussions around the Fed’s interest-rate path, and a possible pivot to rate cuts, continue to take center stage heading into 2024.

But MarketWatch reported last week that demand for active bond ETFs has picked up, with Vanguard launching two new active bond funds earlier this month. The desire for active bond ETFs among the firm’s clients has grown significantly over the past two years, John Croke, Vanguard’s head of active fixed-income product management, told MarketWatch.

Meanwhile, the firms that dominate the indexed and active bond ETF categories are different, Ullal noted. In the indexed bond ETF category, Vanguard competes with traditional rivals BlackRock and State Street, while in the active bond ETF category where it is now expanding its footprint, Vanguard is competing with managers like JPMorgan, First Trust and PIMCO. 

“This competition will put pressure on the incumbent players, but will be good for investors, and will be an important trend to watch in the next year,” said Ullal.

As usual, here’s your look at the top- and bottom-performing ETFs over the past week through Wednesday, according to FactSet data.

The good…

Top Performers

%Performance

AdvisorShares Pure U.S. Cannabis ETF
MSOS
12.7

Amplify Transformational Data Sharing ETF
BLOK
10.5

SPDR S&P Biotech ETF
XBI
9.9

ARK Genomic Revolution ETF
ARKG
8.3

ARK Innovation ETF
ARKK
6.4

Source: FactSet data through Wednesday, Dec 27. Start date Dec 21. Excludes ETNs and leveraged products. Includes NYSE-, Nasdaq- and Cboe-traded ETFs of $500 million or greater.

…and the bad

Bottom Performers

%Performance

iMGP DBi Managed Futures Strategy ETF
DBMF
-2.9

Vanguard Total International Bond ETF
BNDX
-2.2

iShares 20+ Year Treasury Bond BuyWrite Strategy ETF
TLTW
-2.1

VanEck BDC Income ETF
BIZD
-1.2

Vanguard Short-Term Inflation-Protected Securities ETF
VTIP
-1.2

Source: FactSet data

New ETFs

  • TCW Group filed to convert its TCW Artificial Intelligence Equity Fund TGFTX into the TCW Artificial Intelligence ETF, and is seeking to convert its TCW New America Premier Equities Fund TGUSX into the TCW Compounders ETF, according to the fund’s prospectus filed with the Securities and Exchange Commission on Tuesday.

Weekly ETF Reads



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#ETF #strategies #won #big #analyst #sees #year

It’s All About Risk and the Long Bonds

Monday, after a lot of spooky headlines, the SPDR S&P 500 ETF (SPY) touched its 23-month moving average (MA) or the two-year biz cycle breakout point right around 417.

Plus, the iShares 20+ Year Treasury Bond ETF (TLT) flashed green as did IWM, the small caps.

The big question is, can IWM close out October above 170?

If not, any rally will be short-lived.

Today was an interesting day.

SPY also cleared back over the 200-day MA, which if held, could mean more relief rally.

But, TLT is reversing as well, so what we don’t want is for the long bonds to outperform SPY.

Why?

  1. That would be risk-off and recessionary.
  2. It would embolden the already bold commodities to run, especially with the dollar falling.

Which we see as #stagflation.

From a technical standpoint, yes, this is a mean reversion.

However, if you look back to July, it is the 5th oversold rally in TLT.

Sustainable?

The biggest fundamental dynamic is that inflation can go hyperbolic (it already is in certain soft commodities because of the geopolitical soup).

And, if the Fed relaxes now, one must wonder if they will be caught from behind again.

Nonetheless, for us, the most important aspect of this is how TLT performs against the SPY and how HYG (junk bonds) perform against the TLT.

Bulls want TLT to underperform both.

Note the ellipses and text on the chart of TLT or the 20+ Year long bonds.

Back in March, when we had the bank crisis flash crash, bonds signaled a flight to safety by outperforming the SPY starting March 7.

At the same time, the price was around 101.

Real Motion showed a bullish momentum divergence as TLT crossed over the 50-DMA long before the price did.

SPY crashed, and TLTs rallied to 109.10 in a matter of days.

Fast forward to today, TLT remains slightly underperforming the SPY.

The momentum indicator shows a mean reversion but not a bullish divergence.

Should TLT do what it did in March, that is, outperform the SPY, take that as a warning.

That is a sign of risk-off, and perhaps a harbinger of an oncoming recession; or worse, stagflation.

Let’s not freak out yet though.

It is always good to plan ahead yet act on price accordingly.


This is for educational purposes only. Trading comes with risk.

If you find it difficult to execute the MarketGauge strategies or would like to explore how we can do it for you, please email Ben Scheibe at [email protected], our Head of Institutional Sales. Cell: 612-518-2482.

For more detailed trading information about our blended models, tools and trader education courses, contact Rob Quinn, our Chief Strategy Consultant, to learn more.

Traders World Fintech Awards

Get your copy of Plant Your Money Tree: A Guide to Growing Your Wealth.

Grow your wealth today and plant your money tree!

“I grew my money tree and so can you!” – Mish Schneider

Follow Mish on Twitter @marketminute for stock picks and more. Follow Mish on Instagram (mishschneider) for daily morning videos. To see updated media clips, click here.


Hear Mish’s thoughts on earnings, the macro environment, and her three stock picks on Bloomberg BNN.

Ever thought of owning commodities? Hear what Mish says about the key commodities you should consider in this video.

Mish participates in Crypto Town Hall X Space. You can sign in to your X account and watch it here.

In this video, Mish talks about trading Garmin Ltd. (GRMN) on Business First AM.

Mish and Dale Pinkert discuss the disconnect between news and markets-and how to best invest right now in this video from ForexAnalytix’s pre-market show.

In this video from CMC Markets, Mish shares her short-term forecast for USD/JPY and popular commodity instruments ahead of the US PPI announcement and September’s Fed meeting minutes, with recent dovish comments from Fed officials suggesting a potential shift in the committee’s policies.

Mish joins Business First AM to discuss the market reaction to the war in Gaza in this video.

Mish discusses what’s needed for a market bottom on the Financial Sense Newshour podcast with Jim Puplava.

Mish takes over as guest host for David Keller, CMT on the Monday, October 9 edition of StockCharts TV’s The Final Bar, where she shares her thoughts in the daily Market Recap during a day of uncertain news.

To quote Al Mendez, “The smartest woman in Business Analysis @marketminute [Mish] impresses Charles with her “deep dive” to interpret the present Market direction.” See Mish’s appearance on Fox Business’ Making Money with Charles Payne here!

Mish covers bonds, small caps, transports and commodities-dues for the next moves in this video from Yahoo! Finance.

In this video from Real Vision, Mish joins Maggie Lake to share what her framework suggests about junk bonds and investment-grade bonds, what she’s watching in commodity markets, and how to structure a portfolio to navigate both bull and bear markets.

Mish was interviewed by Kitco News for the article “This Could Be the Last Gasp of the Bond Market Selloff, Which Will be Bullish for Gold Prices”, available to read here.

Mish presents a warning in this appearance on BNN Bloomberg’s Opening Bell — before loading up seasonality trades or growth stocks, watch the “inside” sectors of the US economy.

Watch Mish and Nicole Petallides discuss how pros and cons working in tandem, plus why commodities are still a thing, in this video from Schwab.


Coming Up:

October 24: Benzinga Pre Show

October 26: Cheddar TV on the NYSE

October 27: Live in-studio with Charles Payne, Fox Business

October 27: Live in-studio with Yahoo Finance!

October 27: Recorded in-studio with Investor’s Business Daily

October 29-31: The Money Show

Weekly: Business First AM, CMC Markets

November 1–13 VACATION


  • S&P 500 (SPY): 417–420 support
  • Russell 2000 (IWM): 170 now in the rearview mirror
  • Dow (DIA): 332 support pivotal
  • Nasdaq (QQQ): 351 recent low and support
  • Regional Banks (KRE): 35 next support
  • Semiconductors (SMH): 140 support.
  • Transportation (IYT): 225 pivotal
  • Biotechnology (IBB): Under 120 so 110 area next support
  • Retail (XRT): 57 key support still

Mish Schneider

MarketGauge.com

Director of Trading Research and Education



Source link

#Risk #Long #Bonds

Here’s where ETF investors could turn to hide as Treasurys sell-off upends U.S. stocks

Hello! This is MarketWatch reporter Isabel Wang bringing you this week’s ETF Wrap. In this week’s edition, we look at how ETF investors can navigate the choppy financial markets which remain on edge after a sell-off in U.S. government bonds drove long-term borrowing costs to the highest level in more than a decade, undercutting stock prices.

Sign up here for our weekly ETF Wrap.

A renewed rout in the U.S. government bond markets that sent the yield on the 10-year Treasury bond to 16-year highs as a new era of higher-for-longer interest rates takes hold, is leaving ETF investors scrambling for the exits on a wide range of exchange-traded funds in the past week, most notably the iShares 20+ Year Treasury Bond ETF
TLT.
 

TLT, one of the most popular fixed-income ETFs that tracks a market-weighted index of the U.S. Treasury bonds with maturities of 20 years or more, earlier this week suffered its lowest close since the early days of the 2007-2009 financial crisis. The yield on the 10-year Treasury 
BX:TMUBMUSD10Y
slipped 2 basis points to 4.715% on Thursday, after reaching 4.801% on Tuesday, its highest closing level since Aug. 8, 2007, according to Dow Jones Market Data.

See: Bond investors feel the heat as popular fixed-income ETF suffers lowest close since 2007

The bond market, particularly the U.S. Treasury market, has historically been less volatile and and has often performed better than other financial assets during economic slowdowns. However, that doesn’t mean bonds don’t come without their own risks.

Rising yields reflect a diminishing price for the securities when interest rates rise, and hit existing holders of Treasuries.

See: Rising Treasury yields are upsetting financial markets. Here’s why.

The surprising strength of the U.S. economy, as demonstrated by this week’s labor-market data, coupled with hawkish talk from Federal Reserve officials indicating the central bank may need to keep tightening monetary policy, have led to the bond sell-off this week.

Meanwhile, a positive Treasury term premium, or the compensation that investors require for the risk of holding a Treasury to maturity, have also contributed to a steep sell-off as a ballooning U.S. budget deficit and the Treasury’s need to issue more debt have pushed Treasury prices to 16-year lows.

TLT
TLT
has fallen over 50% since its peak in August 2020, according to FactSet data. The losses are “pretty much” what the equity-market loss was from peak to trough during the global financial crisis, said Tim Urbanowicz, head of research and investment strategy at Innovator ETFs. 

“It is not insignificant… It really makes you think about how you’re doing risk management because you can’t have the piece of the portfolio that’s supposed to be the risk mitigator falling the worst we’ve ever seen in the equity-market fall. That’s a big issue,” Urbanowicz told MarketWatch. 

That’s why ETF investors have very few options when developing or adjusting their asset allocation play in the higher-for-longer rates environment, but there are still some shockproof assets for safety, according to ETF strategists. 

Ultra short-term bond funds 

ETF investors that still favor bonds can consider hiding in ultra short-term bond funds to avoid duration risk as the Fed may still need to raise interest rates to curb inflation by the end of 2023, said Neena Mishra, director of ETF research at Zacks Investment Research. 

The SPDR Bloomberg 1-3 Month T-Bill ETF
BIL,
which tracks all publicly issued U.S. Treasury Bills that have a remaining maturity of less than 3 months and at least 1 month, offers a yield of 5.43%. The fund attracted over $1 billion of inflows in the week to Wednesday, the largest inflows among over 800 ETFs that MarketWatch tracked in the past week, according to FactSet data. 

Meanwhile, Mishra said investors who want active management with “better navigation to the markets” can consider the JPMorgan Ultra-Short Income ETF
JPST,
which is an actively managed fund that invests in a variety of debts including corporate issues, asset-backed securities, and mortgage-related debt as well as U.S. government and agency debt. JPST recorded $15 million of inflows in the past week and has yielded 5.76%, according to FactSet data. 

Flows into longer duration bonds, utilities sector

Despite the bond rout hitting the popular TLT fund hard as the 10-year Treasury yield surged, some retail traders have already started to buy the historic dip of the fund devoted to longer-dated Treasuries, said a team of Vanda Research data analysts led by Marco Iachini, senior vice president.

TLT attracted a total of $686 million flows in the week to Wednesday, ranking the 8th out of over 800 ETFs that MarketWatch tracked in the past week, according to FactSet data. 

Along with the strong “dip buying” in TLT, retail traders have also poured an “unprecedented amount” of capital into the utilities sector, Iachini and his team said in a Thursday note. The Utilities Select Sector SPDR Fund
XLU
recorded $141 million of inflows last week, according to FactSet data. 

“While purchases of utilities stocks are typically of a significantly smaller scale than purchases of tech stocks, the inflow seen over the past week is far larger than any other prior 5-day stretch, easily surpassing inflows into the sector at the onset of the Covid downturn,” the Vanda team said. “The flip side of this dynamic is that institutional investors have likely lightened up their utilities exposure during this bond sell-off episode, making the sector a potentially more appealing equity bet should rates be nearing a local peak.” 

See: Utilities stocks ‘decimated’ by rising rates fall into uncommon trading territory, Bespoke chart shows

Small-caps are ‘cheap for a reason,’ so don’t buy them too soon

Many small-cap stocks have traded at a significant discount to their larger-company counterparts, creating an attractive entry point for some investors who think the forward price-earnings ratio for small-caps are low enough to offer potential for outperformance in the longer run. 

However, small caps
IWM
are by nature more sensitive to higher interest rates compared with a lot of the larger-cap stocks which have the ability to be “nimble” with strong cash flow, said Urbanowicz.

“It is really important right now not to just rely on a specific sector but really have that built-in risk management at the index level to take a lot of that guesswork out of the equation,” he added.

See: Small-cap ETFs may look attractive as recession concerns fade, but blindly chasing the rally is not without risk

Defined-outcome ETFs

That’s why Urbanowicz and his team at Innovator ETFs think the increasingly popular defined-outcome ETFs, or the “buffer” funds, could limit the downside risk and help investors navigate a stormy rates environment.

See: An ETF that can’t go down? This new ‘buffer’ fund is designed to provide 100% protection against stock-market losses

For example, the Innovator Equity Defined Protection ETF
TJUL,
the “first-of-its-kind” fund, aims to offer investors the upside return of the SPDR S&P 500 ETF Trust
SPY
to a 16.62% cap, as well as a complete buffer against its downside over a two-year outcome period. 

Meanwhile, the Innovator Defined Wealth Shield ETF
BALT
offers a 20% downside buffer on the SPY every three months, which is a “very shortened outcome period” and doesn’t require the equity market to actually go up for the strategy to appreciate a value, Urbanowicz said. 

“A big reason [to consider this strategy] is it gives investors a place to not only maintain equity exposure, but also to hide out because they [funds] have known levels of risk management that are in place,” he added. 

As usual, here’s your look at the top- and bottom-performing ETFs over the past week through Wednesday, according to FactSet data.

The good…

Top performers

%Performance

YieldMax TSLA Option Income Strategy ETF
TSLY
6.2

United States Natural Gas Fund LP
UNG
2.0

Quadratic Interest Rate Volatility & Inflation Hedge ETF
IVOL
1.6

Technology Select Sector SPDR Fund
XLK
0.9

ProShares Bitcoin Strategy ETF
BITO
0.9

Source: FactSet data through Wednesday, October 4. Start date September 28. Excludes ETNs and leveraged products. Includes NYSE, Nasdaq and Cboe traded ETFs of $500 million or greater.

…and the bad

Bottom performers

%Performance

AdvisorShares Pure U.S. Cannabis ETF
MSOS
-11.3

Sprott Uranium Miners ETF
URNM
-10.6

Global X Uranium ETF
URA
-10.2

VanEck Oil Services ETF
OIH
-9.2

SPDR S&P Oil & Gas Exploration & Production ETF
XOP
-9.1

Source: FactSet data

New ETFs

  • J.P. Morgan Asset Management Friday announced the launch of a new actively managed hedged equity ETF, JPMorgan Hedged Equity Laddered Overlay ETF
    HELO.
    The outcome-oriented ETF invests in U.S. large-cap equities with a laddered options overlay designed to provide downside hedging relative to traditional equity strategies.

  • Zacks Investment Management Tuesday announced the launch of the Zacks Small and Mid Cap ETF
    SMIZ,
    which seeks to generate positive risk-adjusted returns by investing in small and mid-cap companies.

  • Calamos Investments LLC Wednesday announced the launch of the Calamos Convertible Equity Alternative ETF
    CVRT,
     the first product of its kind to provide ETF investors with targeted access to equity-sensitive convertibles.

Weekly ETF Reads

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3 Key Relationships to Help Assess Market Direction

If you are finding yourself fluctuating between bullishness and bearishness, then congratulations! Hopefully, that also means you are waiting for certain signals to help you commit to one way or another.

Here are the signals we are waiting for before overly committing to a bias:

  1. As we wrote over the weekend, how the junk bonds (high yield high debt bonds) do independently, and how they perform against the long bonds (TLT).
  2. How the retail and transportation sectors do (along with small caps) as they represent the “inside” of the US economy.
  3. How DBA (ags) and DBC (commodity index) do relative to the strong dollar and higher yields.

The first chart shows you a sell signal mean reversion as far as the ratio between long bonds and junk bonds signaled. However, junk still outperforms long bonds — at this point, that says risk on, but a cautious risk on, with junk gapping lower and taking out summer lows (but holding March lows at 72.61).

Retail (XRT) had a solid reversal bottom last week. Now, it must clear last Friday’s highs and hold June lows… plus, XRT outperforms SPY right now.

Transportation (IYT) is now underperforming SPY. Although consolidating after breaking under the 200-DMA (green), it looks vulnerable. Could that change? A move over 235 would be a good start.

Looking at DBA, that whole commodities sector is outperforming the SPY. Makes you wonder what would happen if the dollar and/or yields soften.

Trading slightly below the July 6-month calendar range high, we anticipate DBA can continue higher, especially if price retakes the 50-DMA (blue line). DBC fell right onto support at its 50-DMA. Momentum also fell into support. Furthermore, DBA also outperforms SPY. This certainly makes the case for higher commodities and inflation as a trend again, especially if long bonds and the dollar soften.


This is for educational purposes only. Trading comes with risk.

For more detailed trading information about our blended models, tools and trader education courses, contact Rob Quinn, our Chief Strategy Consultant, to learn more.

If you find it difficult to execute the MarketGauge strategies or would like to explore how we can do it for you, please email Ben Scheibe at [email protected].

“I grew my money tree and so can you!” – Mish Schneider

Get your copy of Plant Your Money Tree: A Guide to Growing Your Wealth and a special bonus here.

Follow Mish on Twitter @marketminute for stock picks and more. Follow Mish on Instagram (mishschneider) for daily morning videos. To see updated media clips, click here.


Watch Mish and Nicole Petallides discuss how pros and cons working in tandem, plus why commodities are still a thing, in this video from Schwab.

Mish talks TSLA in this video from Business First AM.

See Mish argue investors could jump into mega-tech over value and explain why she is keeping an eye on WTI prices on BNN Bloomberg’s Opening Bell.

Even as markets crumble, there are yet market opportunities to be found, as Mish discusses on Business First AM here.

Mish explains how she’s preparing for the next move in Equities and Commodities in this video with Benzinga’s team.

Mish talks about the head-and-shoulders top pattern for the S&P 500 in The Final Bar.

Mish covers sectors from the Economic Family, oil, and risk in this Yahoo! Finance video.

Mish shares why the most important ETFs to watch are Retailers (XRT) and Small Caps (IWM) in this appearance on the Thursday, September 20 edition of StockCharts TV’s The Final Bar with David Keller, and also explains MarketGauge’s latest plugin on the StockCharts ACP platform. Mish’s interview begins at 19:53.

Mish covers 7 stocks that are ripe for the picking on the Wednesday, September 20 edition of StockCharts TV’s Your Daily Five, and she gives you actionable levels to watch.

Take a look at this analysis of StockCharts.com’s Charting Forward from Jayanthi Gopalkrishnan, which breaks down Mish’s conversation with three other charting experts about the state of the market in Q3 and beyond.

Mish was interviewed by Kitco News for the article “Oil Prices Hit Nearly One-Year High as it Marches Towards $100”, available to read here.

Mish covers short term trading in DAX, OIL, NASDAQ, GOLD, and GAS in this second part of her appearance on CMC Markets.

Mish talks Coinbase in this video from Business First AM!

Mish looks at some sectors from the economic family, oil, and risk in this appearance on Yahoo Finance!

Mish covers oil, gold, gas and the dollar in this CMC Markets video.

In this appearance on Business First AM, Mish explains why she’s recommending TEVA, an Israeli pharmaceutical company outperforming the market-action plan.

As the stock market tries to shake off a slow summer, Mish joins Investing with IBD to explain how she avoids analysis paralysis using the six market phases and the economic modern family. This edition of the podcast takes a look at the warnings, the pockets of strength, and how to see the bigger picture.

Mish was the special guest in this edition of Traders Edge, hosted by Jim Iuorio and Bobby Iaccino!

In this Q3 edition of StockCharts TV’s Charting Forward 2023, Mish joins a panel run by David Keller and featuring Julius de Kempenaer (RRG Research & StockCharts.com) and Tom Bowley (EarningsBeats). In this unstructured conversation, the group shares notes and charts to highlight what they see as important considerations in today’s market environment.


Coming Up:

October 4: Jim Puplava, Financial Sense

October 5: Yahoo! Finance & Making Money with Charles Payne, Fox Business

October 12: Dale Pinkert, F.A.C.E.

October 26: Schwab and Yahoo! Finance at the NYSE

October 27: Live in-studio with Charles Payne, Fox Business

October 29-31: The Money Show

Weekly: Business First AM, CMC Markets


  • S&P 500 (SPY): There are multiple timeframe support levels around 420-415.
  • Russell 2000 (IWM): 170 huge.
  • Dow (DIA): 334 pivotal.
  • Nasdaq (QQQ): 330 possible if can’t get back above 365.
  • Regional Banks (KRE): 39.80 the July calendar range low.
  • Semiconductors (SMH): 133 the 200-DMA with 147 pivotal resistance.
  • Transportation (IYT): 237 resistance, 225 support.
  • Biotechnology (IBB): 120-125 range.
  • Retail (XRT): 57 key support; if can climb over 63, get bullish.

Mish Schneider

MarketGauge.com

Director of Trading Research and Education

Mish Schneider

About the author:
Mish Schneider serves as Director of Trading Education at MarketGauge.com. For nearly 20 years, MarketGauge.com has provided financial information and education to thousands of individuals, as well as to large financial institutions and publications such as Barron’s, Fidelity, ILX Systems, Thomson Reuters and Bank of America. In 2017, MarketWatch, owned by Dow Jones, named Mish one of the top 50 financial people to follow on Twitter. In 2018, Mish was the winner of the Top Stock Pick of the year for RealVision.

Learn More

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#Key #Relationships #Assess #Market #Direction

Bonds, Secular Bear Market, and the Impact on Small Caps

Bonds have had one of the worst years in modern times and one of the fastest rates of interest rate rises.

The good news is the market has absorbed the bond’s performance. A better risk-on environment is when the SPY outperforms the long bonds. The same is true with junk bonds outperforming long bonds. Another indicator of risk-on.

The yield curve remains inverted — or the potential recession indicator has not, to date, caused a recession. Hence talk of a soft landing. Will yields tap out at 5.5-5.75%? Many think so. However, higher for longer seems more likely.

Furthermore, inflation is not quite done. The PCE, due out this week, is at 4%, not 2% And just as it took from 2020 until spring 2022 to see inflation soar then peak, it is likely we will not see the impact on these rates until 2024 or even 2025. Talking technical, bonds do not look likely to rally from here (TLT). However, we are watching the October 2022 lows carefully.

A potential double bottom exists if TLTs can clear back above 98. A move under 95, though, points more to a retest and possible break of the low 91.85.

How does this impact small caps?

Small caps, as measured by IWM, are key for the fall and into 2024. You can also look at SML, the S&P 600. Over the weekend, we covered that the Russell 2000 (IWM) could be forming an inverted head-and-shoulders bottom going back from the start of 2023. First though, it must hold 180 and clear 190. No small task.

Small caps are related to commercial real estate, so that is a caveat.

Why could small caps do well? The Government has spent a lot of money on US manufacturing, and the Dallas-fed index fell less than expected. In the US quest for more independence on goods, we must look to costs and labor for the trend to sustain. It must be noted though, that prices and wages paid soared. 

The IWM chart shows a lack of leadership thus far against the SPY. The Real Motion Indicator has no real divergence from price. Nonetheless, IWM needs more everything-more rally, more leadership, and more momentum.

Our small caps quant model has done well this year, buying companies with earnings growth. The basket is an interesting combination of semiconductor companies, home building and beauty staples.


For more detailed trading information about our blended models, tools and trader education courses, contact Rob Quinn, our Chief Strategy Consultant, to learn more.

If you find it difficult to execute the MarketGauge strategies or would like to explore how we can do it for you, please email Ben Scheibe at [email protected].

“I grew my money tree and so can you!” – Mish Schneider

Get your copy of Plant Your Money Tree: A Guide to Growing Your Wealth and a special bonus here.

Follow Mish on Twitter @marketminute for stock picks and more. Follow Mish on Instagram (mishschneider) for daily morning videos. To see updated media clips, click here.


Mish served as guest host for the Monday, August 28 edition of StockCharts TV’s The Final Bar! Mish puts her own spin on the Market Recap, starting with the indices and then exploring sectors using her “Economic Modern Family” analysis. She then sits down with Keith Schneider for an insightful interview. Keith discusses topics such as agricultural commodities, biotechnology, and volatility.

Mish and Charles discuss a secular bear market in bonds and why gold could outshine expectations in this appearance on Fox Business’ Making Money with Charles Payne.

Mish and Paul Gruenwald discuss soft landings, recession, inflation, GDP and China on Yahoo Finance.

Mish looks at a selection of popular instruments and outlines their possible direction of travel in this appearance on CMC Markets.

Mish talks NVDA and “Trading the Weather” in these two appearanceson Business First AM.

Read Mish’s commentary on Gold in these two articles from Kitco.

Mish and Nicole discuss where to park your money, barring any watershed event, in this video from Schwab Network.

On the Friday, August 18 edition of StockCharts TV’s Your Daily Five, Mish covers bonds, the dollar, risk-off indications and several key commodities with actionable levels to consider.

Mish joins Maggie Lake of Real Vision to discuss what rising bond yields mean for investors across the market landscape, what comes next for stocks and commodities, and why she is taking profits here in the growth and AI stocks.

Mish shows why January and now the July reset worked in this appearance on Business First AM.

Mish discusses Alibaba’s stock price in this appearance on CNBC Asia.

In this guest appearance on David Keller’s The Final Bar on StockCharts TV, talks higher rates and why China may deserve a second look for investors.

Mish discusses inflation, bonds, calendar ranges and places to park your money on the Benzinga Morning Prep show.

Mish covers why August is a good time for caution in this appearance on Business First AM.

Mish and Jared go over oil and what might happen with small caps and regional banks in this appearance on Yahoo! Finance.


Coming Up:

Mish will be on break starting August 30 and return Tuesday, September 5th.

September 7: Singapore Breakfast Radio, 89.3 FM

September 12: BNN Bloomberg & Charting Forward, StockCharts TV

September 13: Investing with IBD podcast

October 29-31: The Money Show


  • S&P 500 (SPY): 440 now back to pivotal.
  • Russell 2000 (IWM): Popped off the key support. 185 pivotal.
  • Dow (DIA): Will watch to see if it can back over 347.
  • Nasdaq (QQQ): 363 pivotal.
  • Regional Banks (KRE): Needs to hold 44 to be convincing.
  • Semiconductors (SMH): 150 back to pivotal.
  • Transportation (IYT): 239 still support to hold, with 252 biggest overhead resistance.
  • Biotechnology (IBB): Compression between 124-130.
  • Retail (XRT): The 6-month calendar range low is 62.90 — needs to clear it.

Mish Schneider

MarketGauge.com

Director of Trading Research and Education

Mish Schneider

About the author:
Mish Schneider serves as Director of Trading Education at MarketGauge.com. For nearly 20 years, MarketGauge.com has provided financial information and education to thousands of individuals, as well as to large financial institutions and publications such as Barron’s, Fidelity, ILX Systems, Thomson Reuters and Bank of America. In 2017, MarketWatch, owned by Dow Jones, named Mish one of the top 50 financial people to follow on Twitter. In 2018, Mish was the winner of the Top Stock Pick of the year for RealVision.

Learn More

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#Bonds #Secular #Bear #Market #Impact #Small #Caps

Spies like us: How does Russia’s intel network operate across Europe?

With many of Russia’s intelligence officers kicked out of embassies in European capitals in the last 18 months, the Kremlin has resorted to other methods to keep their spy networks alive.

When three Bulgarian nationals were charged this week for their part in a spy plot, ripped from the pages of an Ian Fleming novel, it exposed the lengths that Vladimir Putin’s regime has to go to obtain potentially valuable information, and the risks it now has to take.  

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On the surface, the Bulgarians seemed almost unremarkable, each with very varied backgrounds which can be charted across their social media profiles. 

Orlin Roussev’s LinkedIn profile states he owned a business involved in signals intelligence, which included the interception of communications or electronic signals. He also states that, earlier in his career, he acted as an advisor to the Bulgarian ministry of energy.

Katrin Ivanova says on LinkedIn that she works as a laboratory assistant for a private health business, while the BBC reports that Bizer Dzhambazov described himself as a driver for hospitals.

The pair ran a community organisation providing services for Bulgarians living in the UK, with the BBC reporting that this included familiarising them with the “culture and norms of British society”.

So what do these profiles tell us about the kind of spy work the Bulgarians might have been doing? First we have to look at the state of Russia’s intelligence gathering operations. 

What kind of spies is Russia running?

Russia’s spy networks across Europe – and across the world – fit into four main categories:  

  • Russian spies working at foreign embassies posing as diplomats;
  • Officials or politicians that Russia has managed to turn, and who get paid to provide information;  
  •  Deep cover agents from Russia, known as “illegals”, who live seemingly normal lives (usually they would pass themselves off as from another country, and not usually say they are Russians), maybe running a business or raising their families, and keeping their cover sometimes for decades;  
  • Sleeper spy cells, like the Bulgarians apparently unmasked in London, whose mission it is to wait and observe, to build contacts and possibly try to gain access to people who might become targets for espionage.

In terms of who handles the spies, traditionally the GRU was Russia’s foreign intelligence service while the FSB was the domestic spy service, but those roles have shifted somewhat now. 

“The Russian system is such that you have to blur competences, or even double competences, so the agencies [GRU and FSB] can check and control each other,” explains Ryhor Nizhnikau, a Russia expert at the Finnish Institue of International Affairs, FIIA, describing two agencies with similar missions, but which often compete for the spotlight.

“The FSB for example has an external department and its role has been expanding so it is in charge of operations in Ukraine where it now has a huge presence. And the focus of GRU is leading on Russia’s activities in the West,” he adds. 

Russian embassies stripped of spies

After the full-scale invasion of Ukraine in February 2022, hundreds of Russian spies were declared persona non grata and kicked out of their embassies around Europe. 

It deprived the Kremlin of a much-needed infrastructure of agents who could control operatives on the ground, or run their own intelligence-gathering operations. 

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“A lot of Russian diplomats, the spies, have been expelled. Their human resources have shrunk tremendously,” explains Maxime Lebrun, Deputy Director of Research & Analysis at the European Centre of Excellence for Countering Hybrid Threats, Hybrid CoE, which brings together experts from 33 different countries in Helsinki, and works closely with the EU and NATO. 

“So now they have to rely on regular Russians abroad, or maybe people from other countries like Bulgaria, who may be coerced into speaking to someone, or gathering information from their workplace, perhaps somewhere technological,” Lebrun tells Euronews. 

Ryhor Nizhnikau confirms that Russia needed to “fill the void” of spies at their embassies and “started to wake up some of these sleeper agents” to do work that might usually be done by intelligence operatives at diplomatic missions abroad. 

What sort of work could a Russian agent do?

There have been numerous recent examples of Russian agents getting caught red-handed in Europe: from a deep cover “illegal” who tried to infiltrate the International Criminal Court in The Hague; to a guard at the British Embassy in Berlin who was recruited to spy for Moscow, and many more.

In Norway, a GRU colonel was posing as a master’s student from Brazil at the University of Tromsø, where he was involved in a research group that worked with Norwegian government agencies on hybrid threats linked to the Arctic region, according to Norway’s PST security service. 

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“This tricking aspect is extremely important to describe these random individuals who could pass as students, and get acquainted with teachers or secretaries who got funding for a security project” says Maxime Lebrun from the Hybrid CoE. 

“We had a few cases of not spying, but more like observing the work of key university professors who are unaware that their new student might be an FSB or GRU operative,” Lebrun adds.  

“This kind of random spying is very difficult to spot.” 

Another recent case involved a Russian agent who pretended to be from Peru, and  owned a jewelry store in Naples, close to Nato’s Allied Joint Force Command.

Over the course of nearly a decade, she became friends with senior NATO officials and even had an affair with one of them, and was only caught out when her sequential passport number was among a batch leaked in Belarus and attracted the attention of Belingcat investigators.

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“It is normal in the sense that when we discuss senior UK or NATO officials, sometimes they can be directly recruited, they can become your spies,” says Russia expert Ryhor Nizhnikau.

“But sometimes you can inadvertently make them a source of your information. This agent can meet the wife of a senior official and thereby have access to this person, it could take years to cultivate it, and this person can unknowingly become an asset to Russian intelligence,” he tells Euronews.

Sleeper agents, explains Nizhnikau, can be normal or even boring, just a family friend “and you would never make the connection there is a foreign intelligence operation going on around you.” 

Why would Bulgarians make good Russian spies?

For experts who follow the murky world of international espionage, it’s not much of a surprised that Bulgarians could be involved as sleeper agents for the Kremlin. 

“A Bulgarian could be more open to coercion to spy for Russia than a British person,” says Maxime Lebrun from the Hybrid CoE. 

“Hybrid-related intelligence is extremely societal, what do they think, what are the expectations of the population, and perhaps how to push on those points skillfully if need be,” he explains. 

Once recruited, a new Russian asset might get money to relocate to Britain, there could be money to start a business or to live a normal life – and maybe not even asked to do anything at first, except settle in. 

For Ryhor Nizhnikau there’s an even simpler explanation why Bulgarians could be recruited by Russia. 

“The countries which were part of this former Communist bloc are one of the major sources for the FSB and GRU recruiting.” 

“Maybe they or their family members have been recruited during Communist time, or in the post-Communist legacy times. In Bulgaria or Romania, this is somewhere that Russians have a lot of leverage opportunities and connections for many years,” he says.

“It makes those nations an easier target than recruiting a British person, or potentially sending Russian agents there.”

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#Spies #Russias #intel #network #operate #Europe