Another Afternoon Stumble—Equity ETFs Close AT Their Lows

Ulli Market Commentary Contact

Sure, part of the slide could have been a result of continued profit taking from last week’s run up, but a part of it can attributed to fears about the progress, or lack thereof, of the European debt solution.

Volatility increased again, with the Dow trading in a 300 point range, while the markets remain stuck in the middle of their 2-month sideways pattern, which I discussed yesterday. Concerns about an economic slowdown in China did not help matters, as the Shanghai Composite Index hit a new low for 2011, which gives it a loss YTD of -14.8%.

Still, most of the selling was Greece related, and the effect a default might have on the solvency of Europe’s banks.

There is much guesswork, but no one really has a specific answer as to the overall consequences on the various financial centers not only in Europe but around the world. The fear is that a default might occur in such a way that banks may not have enough time to prepare in order to withstand the shock.

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7 ETF Model Portfolios You Can Use – Updated through 9/27/2011

Ulli Model ETF Portfolios Contact

Last week’s sharp selloff, especially in the precious metals, pushed our core holding, PRPFX, lower at almost the same rate as the S&P 500. We crossed the trend line to the downside and came off the high by more than 7% triggering the trailing sell stop. As posted, I liquidated about 50% of our holdings.

Yesterday’s rebound in the metals helped our cause again, but with reduced exposure. All model ETF portfolios lost.

Take a look at the latest numbers:

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Late Selloff Cuts Into Early Gains—Europe Continues To Boost Global ETFs

Ulli Market Commentary Contact

More of the same, as hopes for a financial rescue plan powered global ETFs higher, but a last hour selloff devoured more than half of the early gains.

Nevertheless, we closed up with gold and silver showing signs of life again after getting hammered last week. While the investing world remains on a bailout high, some reality set in late today when looking at the obstacles such a plan must overcome before it even can be implemented.

Talk abounds that this maybe the start of the fall rally, so the question is whether this rebound has legs or not. Remember, we have been stuck in a trading range of some 100 points for 2 months using the S&P 500 as an example. Every time we’ve reached the upper range, which we came close to today, a sharp selloff took the index back down to the lower end.

The Technical Indicator featured this daily S&P 500 chart, which clearly demonstrates the range we’ve been trading in:

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Major Market ETFs Surge On Europe News—Another Head Fake?

Ulli Market Commentary Contact

[Please note that Gold and Oil prices in above chart reflect the late session]

Nothing but hope provided the ammunition to drive this market out of the deep hole that was dug last week. Sure, after relentless selling, there is bound to be a dead cat bounce or a head fake similar to the one we saw the week prior.

The hope was that European regulators are designing a plan, or a crisis solution, to help stabilize the region via the expansion of a rescue fund and subsequent bond sales to provide the liquidity for banks to absorb the losses if and when Greece defaults.

While that was enough to soothe the markets, at least for one day, details emerged that, in order to raise enough funds to create a big enough bailout gun, leverage will have to be used. Some analysts likened this concept to the last hand in poker, as in “going all in.”

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A Look At HV Bond and Dividend ETFs On The Cutline – Updated through 9/23/2011

Ulli ETFs on the Cutline Contact

With the equity markets having slipped into bear market territory, and momentum numbers showing mostly negative figures, let’s look at bond and dividend ETFs from my High Volume Master list.

From the total of 51 ETFs that I track for this category, there are only 21 that qualify to be listed on this report, as their daily average volume exceeds $10 million.

Take a look:

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Last Week In Review: ETF News And Blog Posts To 9/25/2011

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 9/25/2011.

After visiting the top part of the 6-week trading range the prior week, the major market ETFs got caught in a global crossfire, sold off sharply and ended up visiting the lower end of the range, and then some, which only took 5 trading days to accomplish.

It was a total reversal, and the previous rally will now go down in history as a dead cat bounce.

Europe and its multitude of debt solutions, most of them band aid approaches, will be on the agenda next week, which simply means that we will have to live with more market volatility.

If you followed my sell stops rules, you should not have any equity exposure at this time with the possible exception of a couple of sector/country ETFs, or hedged positions.

This week, we covered the following:

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