Today's Major Economic News and Its Impact on Trading. Plus ETF Picks and Premium Stock Picks
Today we’ll share ETF picks for all subscribers and single-company premium stock picks for paid subscribers, but with the caveat that market conditions are not favorable to bullish intermediate investing time-horizons of weeks to months.
Today's major highlights from the GDP news for the first quarter of 2024 reveal a slowdown in economic growth. Real GDP increased at an annual rate of 1.6%, which is a significant drop from the 3.4% growth seen in the fourth quarter of 2023. This deceleration primarily reflects higher consumer spending and housing investment but was partially offset by a decline in inventory investment. Imports, which detract from GDP calculations, also increased during this period.
The GDP data also show that the price index for gross domestic purchases increased by 3.4% in 2023, which is a decrease from the 6.8% rise in 2022, reflecting a moderation in price increases across the economy, but hotter than expected.
This puts the Fed in a bind. Slowing growth and inflation well above target imply that the central bank will not do anything with interest rates any time soon.
For as disappointing as today’s GDP report was, stocks intraday are not yet showing the typical Danger Zone reading in Factor 10 (Momentum) on Cheat Sheets’ 10-Factor Pretrade Checklist that we’d see if institutions were selling shares hand over fist. But by no means are we suggesting things are on the verge of a bullish turnaround — not when only 5 of the 40 factors measuring the health of the big four stock market indexes below are green — but if selling were accelerating, we’d see a sea of red in our leading indicators, the Short Term Momentum and Near-Term Market Forecast Oscillators. The last hour of trading will render that final verdict if selling accelerates into the close. But here is where we stand two hours after the opening bell.
Our collection of safe-haven futures contracts, which can confirm what we’re seeing in stocks, shows that investors are raising dollars and buying alternative assets, such as bitcoin, silver, and gold. But we’re not yet seeing extreme selling momentum in /ES, the futures contract for the S&P 500 (Factor 10). Treasuries are no place to hide, as inflation numbers are pushing bonds lower (but short-term yields got more attractive today). Oil is in a retracement, but it maintains intermediate and long-term uptrends with bullish buying pressure and a green intermediate market forecast as well.
ETF Spotlight Pick
The TCW Transform Systems ETF (NETZ) is an actively managed exchange-traded fund that primarily invests in U.S. equities. It focuses on companies driving and benefiting from the energy transformation, targeting those that play significant roles in the transition towards more sustainable energy practices. This includes a diverse range of sectors, not limited to, but often involving carbon-intensive industries. The fund aims to identify and invest in companies that are both enablers and direct beneficiaries of the shift towards less carbon-intensive energy systems.
The Alpha Architect U.S. Quantitative Momentum ETF (QMOM) is an actively managed ETF that focuses on U.S. stocks demonstrating strong and consistent momentum. It employs a quantitative, rules-based methodology to select stocks, aiming for long-term capital appreciation. QMOM was launched on December 2, 2015, and it does not track a specific underlying index.
QMOM has a diverse portfolio of about 50 to 100 equity securities. It has net assets of approximately $232.81 million, with a relatively low expense ratio of 0.29%. It has a dividend yield of 0.76% and a beta of 0.92, indicating moderate volatility compared to the market
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