Funky Day On The Street As ETFs Zigzag

Ulli Market Review Contact

[Chart courtesy of MarketWatch.com]

Markets were in a state of flux today as the S&P 500 bumped up only 0.32%. Nevertheless, the Euro remained at $1.30/Euro while commodities didn’t fluctuate tremendously. Pretty much, the outlook hasn’t brightened any more today.

However, on the Asian front, markets took somewhat of a dive as the Shanghai Composite and Nikkei dropped 2.14% and 1.67%, respectively.

IMF chief Christine Lagarde highlighted the severity of the Eurozone crisis by advocating a coordinated effort to stem the contagion. She went so far as to imply that we can see a worldwide economic collapse akin to the Great Depression. The risk certainly hasn’t dissipated.

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Major Markets ETFs Slide Once Again

Ulli Market Review Contact

[Chart courtesy of MarketWatch.com]

Major market ETFs continued to see red again as the situation in Europe worsens. Markets worldwide felt the brunt of the Eurozone’s woes as the S&P 500 fell 1.14% while some European indices hurt even more. In line with this, the Euro prolonged its slide against the dollar, now reaching $1.30/Euro.

There was some serious action in commodities as well. Gold dropped a massive 5.12% to hit $1,575 while oil took a steep drop down to $95. Also, 10-year Treasury yields dropped to a yield of 1.90% as investors flock to seemingly safer U.S. government fixed income securities.

Bernanke announced today that there are no plans for the Fed to offer direct aid to Europe. However, a major turn for the worse could change that seeing that the recent central bank intervention wasn’t initially planned. Europe is simply too volatile to have any concrete idea of what may come next.

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7 ETF Model Portfolios You Can Use – Updated through 12/13/2011

Ulli Model ETF Portfolios Contact

After the prior week’s gain, the S&P 500 lost -2.54% since last Wednesday’s update. As a result, those ETF portfolios with mainly bond exposure gained, some stayed even and some lost slightly.

Again, any sharp market pullback, or gain for that matter, will not affect our models significantly due to the high cash holdings and only limited equity/sector positions.

At this point, with the markets seesawing based on the latest news from Europe, I see no reason to increase risky equity exposure. Despite the much hyped EU summit last weekend, nothing tangible to solve the immediate debt crisis has come out of the endless meetings.

In lieu of that continued uncertainty, I will only change my mind and add equity ETFs if market conditions along with momentum numbers improve.

Take a look at the latest update:

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European Fears Won’t Go Away – Continued Strain on Equity ETFs

Ulli Market Review Contact

[Chart courtesy of MarketWatch.com]

The situation in Europe remains a drag on equity ETFs as markets fell further once more. The S&P edged down 0.85%. The NASDAQ has also been in quite a slump in comparison to the S&P 500 and Dow Jones index, dropping 1.26%. The 10-year Treasury also fell once more, dipping to a yield of 1.96%.

Most notably, the Euro continues to depreciate against the dollar, now hitting $1.30/Euro, its lowest point since January of this year. Although volatility was essentially flat today, there aren’t many positive telling signs that markets will swing into bull territory any time soon.

Evidence that agreement in Europe is quite hard to come by, Merkel dismissed the idea of increasing the size of the European Stability Mechanism (ESM), Europe’s permanent rescue bailout fund. Merkel balked at suggestions of combining the EFSF and ESM given the inability to leverage the financial firepower of the EFSF. In essence, little has been resolved despite the EU summit.

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Back To The Downside – Europe Weighs Down on Equity ETFs

Ulli Market Review Contact

[Chart courtesy of MarketWatch.com]

Despite an EU Summit that appeared to hint towards fiscal unity and discipline, markets didn’t quite agree with that sentiment today. The S&P 500 slid 1.49% while European markets also had a rough day. With cracks still showing in Europe’s financial system, the Euro took a dip against the dollar down to $1.32/Euro.

Unlike most down days though, volatility actually slightly subsided with the VIX falling 2.69%.

However, investors sought out government securities as the 10-year Treasury dropped 2.10% to yield 2.01%. Meanwhile, gold and oil fell 2.85% and 1.54%, respectively.

Moody’s announced that it will conduct a review of Eurozone sovereign credit ratings in the wake of the summit. In essence, last week’s summit failed to inspire much confidence. Anyways, I’ve seen little evidence that Europe currently has the tools to get out of its debt crisis unscathed.

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ETFs/Mutual Funds On The Cutline – Updated Through 12/9/2011

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 397 ETFs, of which currently 101 (last week 84) 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 90 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. Only 16 ETFs (last week 15) have managed to hang on in bullish territory after the recent volatility.

The third report covers Mutual Funds on the Cutline. There are currently 154 (last week 110) above the line and 707 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