ETF/No Load Fund Tracker StatSheet
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Market Commentary
Friday, March 16, 2012
EQUITY ETFS GAIN SHARPLY BUT END WEEK MIXED; GAZ STILL BURNING BRIGHT, VNM SINKS
US stocks ended mixed Friday, restricting weekly gains as inflation climbed unexpectedly in March, and a slew of options contracts expired on the last trading day of the week, adding to volatility.
10-year Treasury notes registered their biggest weekly drop in eight months, as major economic gauges posted strong gains for the week, indicating investors’ confidence in the recovery. Industrial production remained unchanged in February while markets expected a 0.5 percent expansion.
The Dow Jones Industrial Average (DJIA) shed 0.2 percent to close the week at 13,232.62. Up 2.4 percent on the week, this is the Dow’s first decline in seven sessions and the longest winning streak after Feb. 2011.
The S&P 500 Index (SPX) added 0.1 percent to close at 1404.17, with utilities losing the most, and the energy sector leading the day’s gainers among its 10-sector index. The NASDAQ Composite (COMP) shed 0.04 percent to end at 3055.26, also up 2.4 percent for the week.
For every seven stocks rising, eight stocks declined on the New York Stock Exchange.
US Treasury 10-year yields climbed 1 basis point to end the week at 2.29 percent, up from about 2 percent at the beginning of the week, as investors remained optimistic about the economy. The spread between Treasury Inflation Protected Securities and 10-year notes widened the most since Aug. 2011 to 2.41 percent as investors gravitated towards more risky assets.
ETFs in the news:
The iPath Dow Jones UBS Natural Gas Subindex Total Return ETN (GAZ) remained the day’s star performer with 8.64 percent gain, though it remains supported by high premiums.
However, other natural gas futures-tracking ETFs such as United States Natural Gas Fund (UNG) are consolidating after hitting all-time lows. Investor discretion is still required.
Energy related products like the producer-focused SPDR S&P Oil & Gas Equipment & Services Index ETF (XES) added more than 2.5 percent for the week.
Guggenheim Shipping ETF (SEA) came in second on the topper’s chart with an impressive 4.76 percent gain for the day. Shipping companies are trading higher as tankers are reportedly in short supply.
Market Vectors Solar Energy ETF (KWT) added 3.19 percent on the day though conservative investors need to be careful with this product.
Among the day’s losers, Market Vectors Vietnam ETF (VNM) lost 1.77 percent for the day, its third consecutive day of losses.
SPDR S&P Homebuilders ETF (XHB) slipped 1.28 percent on the day ahead of next week’s real-estate linked releases.
Our Trend Tracking Indexes (TTIs) followed upward momentum and have reached the following positions in respect to their long term trend lines:
Domestic TTI: +5.14%
International TTI: +6.89%
If you think the market is way overdue for a correction, you are not alone. Going straight up since the beginning of the year is a condition that simply can’t last. Despite all of the hype, let me be the voice of reasoning to suggest you not forget your trailing sell stops.
The time will come where you most certainly will need them. The timing of it is just the unknown.
Have a great week.
Ulli…
Disclosure: No holdings
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READER Q & A FOR THE WEEK
All Reader Q & A’s are listed at our web site!
Check it out at:
http://www.successful-investment.com/q&a.php
A note from reader Mark:
Q: Ulli: I was wondering why you don’t simply short the market during a down leg. Why use a hedge strategy? It seems your returns would increase.
A: Mark: During bear markets, you will face some the most violent bullish rebounds.
Most investors can’t handle that type of volatility. On a chart, with the benefit of hindsight, it looks pretty easy and straight forward to go short, but it simply does not resemble reality nor addresses an individual’s ability to deal with extreme adverse market moves.
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