ETF/No Load Fund Tracker StatSheet
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THE LINK TO OUR CURRENT ETF/MUTUAL FUND STATSHEET IS:
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Market Commentary
Friday, June 15, 2012
STOCKS RISE ON FED STIMULUS HOPES; RWG POPS, CVOL SINKS
US stocks finished higher Friday, capping two consecutive weekly gains for the first time since April on further stimulus hopes from the Federal Reserve and central banks around the world, if needed, following Greek elections over the weekend.
Wall Street traders are now displaying Pavlovian dog behavior waiting for the bell to ring in order to be served another helping of stimulus food, so economic realities can be overlooked, and the rally can go on.
All economic data points over the past week showed a weakening economy, which is a good thing for the perverse thinkers on Wall Street, as it enhances the chances of getting the spiked punch bowl back. In my mind, every stimulus package of the past has had a lesser effect than the next one, which makes me wonder what ammunition is really left in the Fed’s bag to satisfy traders’ insatiable appetite for more. And what happens if the Fed does not play ball next week?
Here are some of the data points: Treasuries extended a weekly gain after the Federal Reserve said industrial production slipped 0.1 percent in May after gaining one percent in April. Industrial output however grew 4.7 percent over the same period last year.
A separate Bank of New York Federal Reserve report showed the Empire State Manufacturing Index, a barometer of manufacturing activity in the New York region, plummeted to 2.3 in June from 17.1 in May.
The University of Michigan-Reuters Consumer Confidence Index dropped to 74.1 in June to 79.3 in May; the index’s lowest since December.
Treasuries pared yesterday’s yield gains as investors remained anxious over a possible Greek exit following Sunday’s elections. Adding Spain and others to the Europe debt problem brings up the question as to where is the Eurotanic headed?
For some clear, concise and eloquent analysis, let’s listen in to what the ever entertaining Nigel Farage had to say:
ETFs in the news:
The broad rally in US equities pushed markets up with the Dow and NASDAQ closing higher for the second week in a row. The Columbia Large-Cap Growth Equity Strategy Fund (RWG) remained among the top gainers, jumping 4.09 percent for the day. The fund invests in large-cap US equities and ADRs, and RWG’s largest holding, the technology sector, emerged as one of the day’s top gainers.
The iShares FTSE China 25 Index Fund (FXI) also emerged as one of the top performers, gaining 2.10 percent on the day after Chinese stocks traded in the US posted their biggest gains in four months on hopes that the People’s Bank of China will join global peers to boost liquidity. China had cut benchmark interest rates for the first time since 2008 last week to halt an economic slowdown.
As equities extended their rally amid hopes of further monetary easing by the Federal Reserve, the volatility tracking funds retreated. The Citigroup C-Tracks ETN Citi Volatility Index Total Return Fund (CVOL) was one of the biggest losers, shedding 8.93 percent for the day. CVOL is currently trading closer to its 52-week lows as investor risk appetite remains elevated over stimulus hopes.
Our Trend Tracking Indexes (TTIs) improved slightly and ended the week as follows:
Domestic TTI: +2.42% (last week +2.08%)
International TTI: -3.03% (last week -3.91%)
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 Rae:
Q: Ulli: I’m wondering what your thoughts are currently on holding a sizable chunk of PRPFX?
A: Rae: If you are using my recommended trailing sell stop and you set up your position at the same time we set up our ETF model portfolios, then you would have been stopped out just as we did.
PRPFX has shown a disappointing performance YTD, just as it did during the second half of 2011. Right now, it is stuck in bear market territory and has currently broken its long-term trend line by -2.09%.
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