Flat Performance for ETFs Amidst Greek Uncertainty

Ulli Market Review Contact

[Chart courtesy of MarketWatch.com]

As we wait for a resolution between Greece and its bondholders, markets stood flat as the S&P 500 chimed in a meager 0.05%. Meanwhile, the 10-year Treasury climbed to a yield of 2.07%, indicating that investors are less risk averse than they have been in recent weeks.

For the first time in over two weeks, the Euro has broken above the $1.30/Euro level. However, a negative outcome in Greece can quickly send the Euro back down.

As crunch time approaches in Greece, European leaders and the IMF among others are putting pressure on bondholders to accept a haircut. Lest we forget, even a 50% haircut would only reduce Greece’s debt-to-GDP to 120%, which is still unsustainable. A restructuring deal will only delay the likely inevitable default.

Read More

ETFs/Mutual Funds On The Cutline – Updated Through 1/20/2012

Ulli ETFs on the Cutline Contact

Below are the latest ETF Cutline reports, which show how far above or below their respective long-term trend lines (39 week SMA) my currently tracked ETFs/MFs are positioned.

The first report covers the ETF Master List from Thursday’s StatSheet and includes 398 ETFs, of which currently 264 (last week 214) of them are hovering in bullish territory.

The second report includes only High Volume ETFs. To clarify, High Volume (HV) ETFs are defined as those with an average daily volume of $10 million or higher.

These ETFs are generated from my selected list of some 93 that I use in my advisor practice. It cuts out the “noise,” which simply means it eliminates those ETFs that I would never buy because of their volume limitations. 45 ETFs (last week 33) have managed to move into in bullish territory after the recent run.

The third report covers Mutual Funds on the Cutline. There are currently 603 (last week 448) above the line and 258 below it out of the 861 that I follow.

Take a look:

1. ETF Master Cutline Report

2. ETF High Volume Cutline Report

3. MF Cutline Report

Last Week In Review: ETF News And Blog Posts To 1/22/2012

Ulli ETF News Contact

In case you missed it, here’s a summary of the ETF topics and market reviews I posted to my blog during the week ending on 1/22/2012.

The markets inched higher apparently following the mantra that, if globally things look poorly from an economic standpoint, and there is a wall of worry, it can be climbed.

While it’s nice to see less volatility than we’ve witnessed in 2011, it remains to be seen how long this condition will last and if or for how long the U.S. market can stay decoupled from international events.

This week, we covered the following:

Read More

Despite This Week’s Bullishness, Risk Hasn’t Faded Away

Ulli Market Review Contact

Markets performed quite well this week across the globe, but let’s not get our hopes up so high. European fundamentals still haven’t markedly changed while Greece’s fate is still in the hands of its bondholders. In other words, don’t jump full on into equity ETFs.

This week’s video from Nouriel Roubini and Ian Bremmer highlights some of the risks plaguing the global financial system. Not only is Europe stagnating, but China’s growth is slowing down, revealing the extent of the global recession. With China already in a currency war with the U.S. that will only get messier as China’s exports slow down, the eco-political tension will surely heighten.

Furthermore, the general process of deleveraging in Europe and the U.S. continues to have a negative impact on the global economy. In addition to the uncertainty surrounding whether Greece will default, Dr. Doom believes other PIIGS members will have to restructure their debt. However, this would be an insurmountable task for Italy and Spain, who collectively account for nearly $4 trillion in debt.

With mounting economic challenges in Europe and China as well as Middle East instability for that matter, we are certainly in a risky market environment, which supports my view that an exit strategy for your investments is an absolute necessity.

The Rationale Behind Remaining Invested in the U.S.

Ulli Market Commentary Contact

In conjunction with abnormally warm winter weather across the nation, markets have followed suit. So far this month, the S&P 500 has gained 4.6% while the NASDAQ has performed even better, returning nearly 7%.

Although I doubt that this current hot streak will carry on long-term, there are certainly some short-term opportunities to capitalize on some attractive equity ETFs while holding on to a sizeable portion of bond ETFs.

Over the last few months, we’ve been maintaining a selective buy target on domestic/sector ETFs and a sell target on international ETFs. This has been beneficial as the Domestic TTI has been in the green while our International TTI remains in the red.

As seen in our most recent domestic ETF cutline report, domestic ETFs have done quite well over the last couple months, especially the industrials sector, with double digit returns in the short-term and above their moving averages. However, as seen in the international ETF/mutual fund cutline report, many foreign ETFs are still below their moving averages despite recent gains.

Read More

01-20-2012

Ulli Newsletter Archives Contact

ETF/No Load Fund Tracker Newsletter For Friday, January 20, 2012

ETF/No Load Fund Tracker StatSheet

————————————————————-

THE LINK TO OUR CURRENT ETF/MUTUAL FUND STATSHEET IS:

https://theetfbully.com/2012/01/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-01192012/

————————————————————

Market Commentary

Friday, January 20, 2012

MARKETS TEMPER TODAY, BUT IT’S A BULLISH WEEK FOR ETFS

After a few days of propelling ahead, markets finally took a breather with the S&P 500 barely finishing ahead at 0.07%. European indices slightly dipped while Asian indices had a strong day.

In commodities, gold is above $1,650 while oil finished below $100. Meanwhile, the Euro appreciated against the dollar this week, ending at $1.29/Euro.

And for the first time this year, the 10-year Treasury broke back above the 2% level. Although we certainly aren’t in risk off mode, it appears investors are getting the feeling that European sentiment is improving. There’s hope that Europe will pull it together, but it’s just hope.

It looks like European leaders might be making progress toward greater fiscal discipline ahead of next Monday’s meeting among EU finance ministers. With Germany leading the way, leaders are realizing that EU members must adhere to stricter guidelines to maintain a balanced budget and to reduce the overall debt load. Otherwise, they will face a financial penalty according to the proposed plan.

In Greece, officials might be getting close to a deal with bondholders that would effectively result in a 70% haircut, but would offer bondholders 30-year government debt with a higher interest rate. Unless both sides come to a consensus, the nearly $19 billion bailout payment to Greece won’t go through. Even if Greece reaches a deal next week, it’s simply buying time in my opinion.

A sign of difficult times, the IMF dropped its global growth forecast down to 3.3%. The Eurozone is expected to contract by 0.5% with Spain and Italy experiencing the strongest economic headwinds. The UK is forecast to have the highest growth, demonstrating the benefits of not being part of the Eurozone.

In the U.S., home sales picked up in December, rising 5 percent. However, home sales are still far below pre-crisis levels, showing that the housing market has a long road to recovery.

More than before, our Domestic TTI is now 3.51% above its trend line, thus supporting our decision to gain a little extra equity ETF exposure stateside.

Outside our borders, the International TTI is inching closer to its trend line at -1.47%. But we’re still staying out of international equity ETFs given unfavorable conditions in Europe that could have a greater effect on Asian and emerging economies. However, there is a good chance that I may change my mind, once the International Trend Tracking Index (TTI) has clearly pierced its trend line to the upside.

The S&P 500 has had a strong month so far, returning over 4% but next week’s Greek talks with bondholders should offer more guidance. Amidst this lower volatility, it’s a good opportunity to add selective equity ETF exposure, as we did last week, but only where upward momentum supported the decision.

Have a great week.

Ulli…

————————————————————-

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 David:

Q: Ulli: I have been following momentum on stocks and ETFs, in part by checking on the % greater than MA200. Some have reached 10% to over 20%. Do you have a rule-of-thumb on this to indicate that the stock is OVERBOUGHT?

Another parameter I have been looking at is HOW LONG the stock has been greater than MA200. Any rule-of-thumb here?

Another parameter is whether the % greater than MA200 is increasing rapidly, in particular, IF THE SLOPE HAS SUDDENLY INCREASED. Any rule-of-thumb here?

Last, I imagine that in each case above, one might need to take into account the OVERALL MARKET CONTEXT, i.e., trading range or strong bull or strong bear, and the sector context. Any rules-of- thumb here?

I am asking such a long string of questions because it seems obvious that a quick yes-or-no will not suffice.

Thanks again, as always.

A: David: No rules of thumb for any of your scenarios. I simply let the current momentum carry a fund/ETF to its eventual high point, from which a reversal will occur. If that reversal is strong enough, it will trigger my trailing sell stop and get me out of the market.

I attribute the various scenarios you posted simply to the volatility differences of a specific fund/ETF but have not seen a way to use that information in making better investment decisions.

Sorry, I can’t be of more help.

———————————————————-

WOULD YOU LIKE TO HAVE YOUR INVESTMENTS PROFESSIONALLY MANAGED?

Do you have the time to follow our investment plans yourself? If you are a busy professional who would like to have his portfolio managed using our methodology, please contact me directly or get more details at:

https://theetfbully.com/personal-investment-management/

———————————————————

Back issues of the ETF/No Load Fund Tracker are available on the web at:

https://theetfbully.com/newsletter-archives/