Dow Falls Four Days Straight

Ulli Uncategorized Contact

Thur pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Stocks pulled back a tad on mixed corporate earnings and falling oil prices as the Dow slipped for a fourth straight day.

Oil prices continue to fall with no obvious reason as the price of West Texas Intermediate Oil, the U.S. benchmark, was down 1.96% to close at $41.10 a barrel. Oil prices are down for a sixth straight day and have fallen nearly 8% this summer.

On the earnings front, social-networking giant Facebook (FB) posted 59% quarterly revenue growth in a strong performance that drove shares up 1.8%. But a disappointing Ford Motor (F) earnings report dampened the mood as the Dearborn, Mich.-based automaker’s stock dropped 9.6% to $12.52. The company’s disappointing earnings report contrasted with a strong performance by General Motors (GM) earlier this week.

In other news, it seems that Dollar General (DG) is taking advantage of Walmart’s (WMT) castoffs to grow its massive fleet of stores. The company said Wednesday that it bought 41 former Walmart Express stores and plans to relocate 40 existing Dollar General stores (plus open one new store) to the new sites by October. Dollar shops have been a growing threat to big-box stores and grocers alike since winning over recession-strapped customers and starting to sell more food and perishables, the kinds of goods that drive frequent trips.

More earnings numbers are on deck for tomorrow, as well as key economic data on how our economy fared for the second quarter.

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Mixed Signals

Ulli Market Commentary Contact

Wed pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Stocks ended mixed after the Federal Reserve’s afternoon decision to leave interest rates unchanged was no surprise to investors. The Fed, which hiked rates off 0% back in December for the first time in nearly a decade, has kept rates steady this year, citing uncertainty abroad, the aftermath of the ‘Brexit’ vote and an early-year slowdown in the U.S. Many presume that the next rate hike will not take place until early 2017.

What that really tells you is that economic conditions are in such bad shape and continually worsening that even a tiny 1/8% raise in rates might have a severely negative effect on the financial markets and most likely would pull them off their lofty levels. As I repeatedly posted, the Fed’s goal is to keep major indexes elevated in order to keep the recovery illusion alive.

In earnings news, the big winner of the day was Apple (AAPL), which saw its shares surge about  7% to a three-month high after iPhone sales (which fell 15%) still came in above estimates at 40.4 million units. The maker of the iPhone, which has lost its luster with investors after posting its first-ever iPhone sales drop in Q1, also forecast better sales in the current quarter.

In other earnings news, Dow component Boeing (BA) saw its shares rise 0.8% after it topped profit estimates and reaffirmed its revenue guidance for the rest of the year. Coca-Cola (KO) shares fell 3.3% on a sales miss and a downgrade of its outlook.

Eyes remain focused this week for further earnings reports and big economic data numbers due Friday.

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Bulls Are On Hold; Waiting For The Fed

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

U.S. stocks ended mixed Tuesday as investors digested a mixed batch of earnings reports and as the Federal Reserve kicked off a two-day meeting on interest rates. As you can see in the above S&P chart, stocks dropped sharply during mid-day about 0.75%, but were pushed back up since, with the Fed in charge of market direction, market pullbacks of more than 0.3% appear to be no longer “allowed” in this “new” trading environment…

In earnings news, McDonald’s (MCD) contributed to the Dow’s decline today after the fast-food giant reported earnings that missed Wall Street estimates and posted disappointing sales numbers.  Shares fell 4.4%.  Shares of Verizon (VZ) fell 1.9% after the telecomm company said a worker strike in the spring hurt its second-quarter results.  United Technologies (UTX) raised its outook for the year and reported earnings and revenue that beat estimates.  Shares were up 2.7%.  Dupont (DD) shares rose 0.7% after cost-cutting helped boost profits that beat expectations for the chemical company.

In auto news today, we finally heard the verdict today regarding Volkswagen’s environmental scandal. Volkswagen Group will pay up to $14.7 billion in a sweeping settlement that includes compensation for owners for its polluting diesel-powered cars, environmental mitigation and funds to promote zero-emissions cars. Owners of the 475,000 Volkswagen vehicles with 2-liter diesels covered under the settlement will receive payments ranging from $5,100 to $10,000 if they agree to the settlement.

More earnings reports are due this week from both S&P 500 and Dow companies, as well as the Friday economics report, but on deck for tomorrow is the widely anticipated outcome of the Fed meeting on interest rates. My guess is “no change.”

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Slow Start Following Four Week Run

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

After ending last week at a record high, the U.S. stock market pulled back Monday ahead of a week that features a big onslaught of corporate earnings results, a key meeting on interest rates and a barrage of fresh economic data.

Stocks are riding high on four straight weeks of gains, driven by a better-than-expected start to the Q2 earnings season, continued propaganda that the U.S. economy is holding up following Britain’s vote to exit the Eurozone, and hopes among investors that central bankers from around the globe will continue to be supportive, which at this time is a given.

In earnings, nearly 200 companies in the S&P 500 are due to release quarterly profits this week. Thus far, about 68% of the 26% of companies have reported. However, even with the modest pick up in earnings, if only relative to expectations, “the blended earnings decline is still -3.7%, putting the quarter on pace for the fifth consecutive decline in earnings since Q3 2008 through Q3 2009”, as one analyst put it.

In M&A news, a winner was finally crowned for the takeover of Yahoo’s (YHOO) core business. That winner is Verizon (VZ). Verizon made the official announcement that it is paying $4.8 bil in cash. The telecomm giant will pair Yahoo with AOL, which it bought last May.

And on the economic front, anticipation will be high awaiting the first reading on second quarter economic growth after the first quarter of this year saw a disappointing 1.1% GDP. Tomorrow, we will get the latest data reading on new home sales and consumer confidence, and on Wednesday durable goods orders are set for release.

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One Man’s Opinion: Could This Rally Be A Head-Fake?

Ulli Market Review Contact

OneMan'sOpinionBy Charles Hugh Smith

If there’s nothing supporting this rally but euphoric sentiment arising from orchestrated buying, any eruption of reality will reveal the rally as a head-fake.

Let’s say you wanted to engineer a stock market rally that triggered every technical “buy” signal and wiped out those who are short the market–what would you do? First, you’d engineer a new all-time high to signal “all clear for further advances.”

Then you’d crush volatility as measured by the VIX, signaling that there is nothing standing in the way of more advances.

Next, you’d engineer new highs every day for a week or more.

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ETFs/Mutual Funds On The Cutline – Updated Through 07/22/2016

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 381 ETFs, of which currently 506(last week 332) 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. Volume figures can change in a hurry, so be sure to check first before investing.

These ETFs are generated from my selected list of 98 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. 81 ETFs (last week 83) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 730(last week 711) above the line and 50 below it out of the 780 that I follow.

Take a look:

  1. ETF Master Cutline Report
  2. ETF High Volume Cutline Report
  3. MF Cutline Report

In case you are not familiar with some of the terminology used in the reports, please read the Glossary of Terms.

If you missed the original post about the Cutline approach, you can read it here.