ETF & Mutual Fund Watchlist for November 29, 2017

Equities rallied to new all-time highs after Senate Republicans on the Budget Committee voted unanimously in favor of the tax bill ahead of Thursday’s anticipated final vote.
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Positive news around tax reform jolted financial sector activity, with big gains in banking and brokerage sectors.
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SPDR S&P Regional Banking (KRE) and Bank (KBE) made major bullish breakouts from their 2017 trading ranges. Insurance and brokerage stocks were trading at new highs prior to this latest rally.
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Major sector rotation is also underway. Technology stocks, such as PowerShares QQQ (QQQ) and iShares Semiconductors (SOXX) tumbled. The one-day loss in SOXX reversed all the gains in November.
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Today’s shift, however, it may not last. The current spike in value and drop in growth happened in June, followed by a smaller and shorter spike in September. The Pure Growth (RPG) and Value (RPV) ETFs from Guggenheim shows value approaching the September relative price peak.
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The U.S. dollar will also benefit from tax reform.
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The U.S. stock market extended its outperformance versus the MSCI EAFE following the tax cut news. A stronger U.S. dollar has underpinned the move.
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The U.S. market is also on the verge of breaking out versus emerging markets. Weakness in the Chinese market has weighed on emerging markets over the past week. Despite the drop in China, the chart remains in an uptrend. A look at the fundamentals warrants more caution. Chinese interest rates are rising as the government lowers credit growth and targets the shadow-banking sector.
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Gold is likely to lose from tax reform. The Federal Reserve will hike rates as economic growth picks up and financial conditions ease, even as inflation remains relatively low.
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Crude oil touched $59 a barrel before pulling back this week. United States shale oil producers could be the main beneficiaries of an extended cut. West Texas Intermediate crude weakened to $57 following the news. Oil-related equities spiked in early November, but have been down over the past two months.
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The biotechnology sector continues to weigh on healthcare, but pharma and healthcare providers have rallied strongly this month. Medical devices remain the strongest subsector. UnitedHealth Group (UNH) lifted the provider subsector today after strong earnings and guidance for 2018.
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Transportation stocks led the industrial sector to a new all-time high today. Defense shares are nearing a breakout.
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Strong housing data sent iShares U.S. Home Construction (ITB) to another 52-week high. New homes sales jumped to an annualized pace of 685,000 in October, well above expectations and consistent with a robust economic expansion. Shares have gained 30 percent over the past three months.
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Market Perspective for November 27, 2017

Equities opened higher on Monday after reportedly strong retail sales. Shares of Amazon (AMZN) climbed above $1200 after an estimated online sales increase of 30 percent versus a year ago.

New home prices topped $400,000 for the first time in October. Sales rose 6.2 percent to an annualized pace of 685,000, crushing expectations of 6.1 percent. This jump in sales should bump up GDP estimates for the quarter.

Wednesday will bring the revised estimate of third-quarter GDP. The consensus calls for an increase to 3.3 percent from the initial 3.0 percent. Pending home sales, consumer spending, core inflation, personal income and construction spending for October will also be out this week. The November manufacturing PMI surveys from ISM and Markit are due on Friday. The flash numbers out last week showed a small decline in the U.S. surveys. November motor vehicle sales will also be released on Friday. Forecasts call for an annualized sales pace of 17.6 million, down from the post-hurricanes peak of 18.1 million in October.

OPEC will meet later this week. OPEC has bolstered oil prices over the past year after a deal with Russia to cut production. West Texas Intermediate crude closed last week at $59 a barrel, but it fell as low as $57 on Monday.

Japanese media reports North Korea is preparing for another ballistic missile test. iShares U.S. Aerospace & Defense (ITA) was flat on Monday, but a test could renew interest in the sector. Shares are 3 percent off their all-time high.

Important overseas reports this week will include Canadian bank earnings and European inflation. Analysts see Eurozone consumer inflation hitting 1.6 percent and core inflation rising to 1.0 percent. The European Central Bank was dovish at its last meeting relative to expectations.

Tiffany & Co (TIF), Vmware (VMW) and Kroger (KR) will headline a light week for earnings reports.

The ETF Investor Guide for November 2017

The November Issue of the ETF Investor Guide is AVAILABLE NOW! Links to the November Data Files have been posted below. Market Perspective: Earnings Growth Should Propel Stocks into 2018 […]

Market Perspective for November 24, 2017

The S&P 500 Index rose 0.97 percent on the week, and the Russell 2000 Index gained 1.83 percent.

Economic data was also strong this week. Existing home sales beat expectations, following stronger-than-expected new home sales last week. Initial claims for unemployment fell to 239,000, down from 252,000 a week earlier. The University of Michigan consumer sentiment survey was the second-highest reading in the past year.

The flash November PMIs in manufacturing and services declined from October. The Eurozone flash manufacturing PMI hit its highest level since April 2011 on Thursday, and beat flat expectations. European stocks gained on Thursday while U.S. markets were closed.

Chinese equities fell 2 percent from their highs this week after China’s deleveraging efforts hit the corporate bond market. Government bond yields rose at the end of the National Congress in October, and corporate bond yields have followed.

The odds of a December hike were unchanged by the Fed meeting minutes, but the odds of a rate hike in the first half of 2018 have increased. In contrast, the currency and bond markets see only one hike in 2018. The U.S. Dollar Index tumbled to a five-week low as investors sold on the prediction.

Crude oil approached $59 a barrel this week. The Keystone pipeline remains shut after last week’s spill. Prices should stabilize when the pipeline reopens. Energy equities rebounded softly from sharp losses a week earlier.

Online retailers rallied this week as investors anticipate strong sales. Amplify Online Retail (IBUY) hit a new 52-week high. SPDR S&P Retail (XRT) traded near a 7-month high. Shares of Amazon climbed 2.58 percent on Friday, lifting online retail and the broader consumer discretionary sector.

Earnings also lifted the market this week. Deere (DE) and Medtronic (MDT) both bested expectations. Their shares rose 7.16 and 4.74 percent, respectively. Industrial and healthcare funds benefited from the moves. VanEck Agribusiness (MOO) hit a new all-time high.