High Volume ETFs On The Cutline – Updated Through 9/21/2011

Ulli ETFs on the Cutline Contact

With yesterday’s sell off, as a result of the Fed’s “stimulus” not being perceived as large and dramatic enough, the S&P 500 has given back -1.85% since last week’s report.

This weakness was immediately reflected in the momentum numbers and affected rankings above and below the cutline. We held steady in terms of positioning, as only 7 ETFs remain above the line and in bullish territory, while all others roam around with the bears below the line.

As I mentioned last week, despite the various rebound attempts, weakness prevails in the equity arena. I still consider the current market environment to be a traders market and not one for long term investors due to its extreme volatile nature. A long term trend in either direction can simply not yet be identified without wild guesswork.

To repeat, the High Volume ETF Cutline report includes all ETFs above and below the cutline (trend line). 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.

Take a look at the most recent ETF Cutline Report:

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Equity ETFs Wobble, Then Turn Into A Sell Fest

Ulli Market Commentary Contact

While doing what is expected can be a good thing, it can also backfire, especially when Wall Street is clamoring for a serious assist from the Fed to boost the ailing economy one more time.

Well, that did not happen, and disappointment set in pulling the rug out from any early upward momentum. As the chart from MarketWatch.com above shows, we closed at the lows of the day, which may invite more selling tomorrow.

The Fed’s Operation Twist is designed to keep long-term rates low hoping/wishing to jumpstart the economy. The FOMC in its notes remarked that economic weakness has continued, unemployment remains high and housing is a disaster. Also, further downside risks to the economy remain while global financial markets are strained.

While that is really nothing new, it makes it official and traders on Wall Street did not like it one bit, and selling accelerated during the last hour.

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7 ETF Model Portfolios You Can Use – Updated through 9/20/2011

Ulli Model ETF Portfolios Contact

Gold slipped while the S&P 500 gained +2.47% since last Wednesday’s report. As a result, some of our ETF Model Portfolios retreated as well, as the roller coaster ride in the markets continued.

Currently, it’s all about interpretation of the latest news about Greece & Co., while domestic weak economic reports have been mainly shrugged off. Uncertainty continues, and Wall Street traders will eagerly await the outcome of the Fed meeting later on today.

This is the time to just sit and wait until we can better evaluate the major trend. All eyes are on Fed chief Bernanke and, to my way of thinking, nothing less than a grand, unexpected assist will move the major indexes higher. Anything less than that will likely be met with disappointment resulting in a sell-off.

Take a look at this week’s model portfolios:

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Dying Into The Close—Major Market ETFs Surrender Gains

Ulli Market Commentary Contact

If you were a bull, you must have been excited to watch the rally unfold as all major market ETFs gained strongly.

But, what starts well does not always end well. This was the case today, as the morning rebound succumbed to profit taking in the afternoon in anticipation of what the Fed might announce tomorrow.

Will it be the widely anticipated “operation twist” to attempt to pull the economy out of the doldrums? In case you missed it, operation twist involves the Fed selling short-term assets and reinvesting the proceeds to buy longer term durations with the goal of limiting pressure on long-term rates.

Or, will they go all out with some type of shock-and-awe effect? If they do, there is a good chance that the markets will react positively; if they don’t, you might just see a sell-off as disappointment is sure to spread.

Not helping the rebound in the afternoon were news reports questioning as to whether Greece might get a short-term injection of cash to prevent a default on its bonds.

It’s uncertainty and rumors all of the time. Let’s hope the Fed’s action, or lack thereof, can give us some clue as to the major direction of the market. If not, we may be stuck in this trading range for a while longer.

Greek Worries Are Still Alive—Equity ETFs Pull Back

Ulli Market Commentary Contact

After last week’s sharp rebound, equity ETFs were not only overbought, but also ‘over-hoped,’ as one trader put it.

Concerns about a Greek default sooner rather than later, due to lack of a new austerity plan, pulled the markets lower right at the opening as selling accelerated. It looked pretty ugly for a while as several attempts to swing higher failed until the last hour of trading.

That’s when news surfaced that the Troika gang (IMF, ECB and EU) was engaged in positive talks with Greece (details unknown), which gave the major indexes a lift and cut down prior losses in half.

It’s hard to say whether the alleged progress of the Troika is for real or just another patch-up job attempting to avoid the unavoidable.

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All Eyes Are Focused on Fed and IMF Meetings; ETF Master Cutline List – Updated through 9/16/2011

Ulli ETFs on the Cutline Contact

Dollar intervention efforts by global central bankers and jawboning about support for Greece proved to be the secret sauce to get the major market indexes moving higher during the past five trading days.

If all-around efforts continue to assist Europe, we might even see a break out the current 6 week trading range. However, there will be headline risk, depending on the outcome of the Fed’s 2-day meeting, as well as a speech by the Greek prime minister after the IMF/World Bank gathering.

It promises to be a week with a lot of potential fireworks. As one analyst said “there will be rallies like we had this week but until the trend changes, they should be sold into.”

In regards to the ETF Master Cutline, last week’s rally had some effect in that there are now 51 ETFs positioned above the line (up from 34), while 345 ETFs still hover below it and in bear market territory (down from 362).

Despite its pullback this week, gold ETFs still remain in the top spot followed by various government bond funds, which continue their moves to higher ground as lower interest rates support upward momentum.

Take a look the latest report:

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