Markets Cool Off a Bit, But Equity ETFs Are Still in the Hot Seat

Ulli Market Review Contact

[Chart courtesy of MarketWatch.com]

After three days of large swings, markets tempered a bit to say the least. Volatility heavily subsided as the VIX rose 1.28%. As far as market performance, the S&P 500 posted a modest gain of 0.46% while trading with a relatively narrow 20 point band. In an otherwise relatively quiet day, gold took a bit of a dip, dropping 2.25%. Europe is still our primary focus in trying to determine market direction.

Although Greece has taken some arguably positive short-term steps to prevent default by passing austerity measures, Europe’s fate hasn’t gotten any more certain. The French and Germans remain divided over how to go forward with the EFSF expansion in terms of how much each country should contribute. More fundamentally, there is no consensus as to how the funds should be raised, leaving the plan in limbo. But there is some hope that Europe is taking some steps in the right direction.

Read More

The Long-Term Outlook Still Looks Questionable for Equity ETFs

Ulli Market Review Contact

[Chart courtesy of MarketWatch.com]

In what has so far been a topsy-turvy week on Wall Street, the markets backtracked into the red after Tuesday’s gains. While the Dow was marginally affected, dropping 0.63%, the S&P 500 and NASDAQ respectively fell 1.26% and 2.01%. It’s quite a disparity among the three major indices indeed. Meanwhile, oil dipped 2.60% to 86.04/barrel.

With regards to the U.S. economic outlook, the recent Beige Book report from the Fed highlighted some improvement in consumer spending as well as manufacturing. However, lower business investment, as shown by lower loan activity, as well as persistent high unemployment, continue to be a crutch for the economy, a sentiment expressed by falling markets today.

Weak economic data and mixed corporate earnings show few signs of improvement in the U.S. Yet, the extent of Europe’s progress with the debt crisis still remains an unanswered question as well.

Read More

7 ETF Model Portfolios You Can Use – Updated through 10/18/2011

Ulli Model ETF Portfolios Contact

Riding the hopes of a European debt solution pushed the major market ETFs to the upper end of the trading range. While domestic equity ETFs still remain on the bearish side of the trend line, some sector ETFs have crossed to the upside and are offering opportunities for gaining limited exposure.

Yesterday, I took advantage of early weakness to add XLP to clients’ portfolios as well as to some of our ETF Models. There are a couple other possibilities I have my eye on. Another strong push may very well be the one that confirms an upside breakout and brings domestic equities into play again.

Take a look at the latest numbers:

Read More

This Market Turbulence is Mind Boggling for ETFs

Ulli Market Review Contact

[Chart courtesy of MarketWatch.com]

Just when it seemed like markets came to reality and began taking Europe’s problems into account again, equities shot up, with the S&P 500 rising 2.04% while volatility subsided.  The amount of sensitivity to news in the marketplace is borderline insane at the moment. I simply can’t deviate from our strategy yet, unless a viable long-term trend develops; at least for equity ETFs.

The big news of the day was an announcement from France and Germany that the EFSF would be roughly quadrupled to $2 trillion. Yet, the spread between the French 10-year bond and the German bund hit its highest since 1992 at 114 basis points. The expansion is a crucial step to address Eurozone debt, but does it mean we have a long-term solution?

Read More

Market Risk is Back On For Equity ETFs – Are We Heading Down Again?

Ulli Market Review Contact

[Chart courtesy of MarketWatch.com]

Finally coming to grips with the underlying issues plaguing Europe, markets went into reverse after two weeks of gains, with the S&P dropping 1.94%. Most notably, the VIX skyrocketed 18.24%, indicating that worries concerning a European debt solution have substantially put risk back on the table.

Furthermore, the dollar appreciated against the Euro, finishing at $1.37/Euro, while the 10-year Treasury dipped to 2.16%. Oil and gold had modest losses just north of 0.5%

Just when it seemed like the market was turning a corner with a brief rally, potentially prompting some limited equity exposure, the gloom and doom reality of Europe entered the investment sphere once again. Let’s just say the numbers aren’t looking too rosy.

Read More

Sector ETFs: Is There Upward Momentum? ETF Master Cutline Report Provides Some Answers

Ulli ETF News Contact

I have made no secret out of the fact that I remain somewhat skeptical about the current market run-up; however, some of the positive trends as of late have necessitated looking at some sector ETFs.

I’m still sticking to a general strategy of bond ETFs/cash, but if trends continue to point higher, and more trend lines are crossed to the upside, there might be some equity additions to our overall portfolio.

Although there is still a lack of clear direction of where the global economy is heading, and how that will impact markets, I want to highlight some possible ETF opportunities if the overall picture brightens up.

Focusing on sector ETFs, it’s a bit of a mixed bag. It’s best to steer clear of the battered financial sector, especially in the wake of dismal earnings from Wall Street, as seen by the performance of the Financial Sector SPDR ETF (XLF), which is now down 21.0% for the year.

Not to mention, the basic materials and energy sectors have been hit hard as of late given reduced Chinese demand among other factors. In essence, there’s a lot of volatility here. While our momentum numbers support that view, there are some possible gems.

Read More