Waiting For The Fed

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Stocks ended at par today as Wall Street reacted to a resumed slide in oil prices and braced for the Federal Reserve’s decision Wednesday on interest rates.

A major driver of the recent stock market rally has been a sharp rebound in oil prices. But U.S.-produced crude has reversed course the past two trading sessions and has resumed its fall amid fresh worries about oversupply, which has weighed on market sentiment. A barrel of West Texas Intermediate crude closed down 2.3%, to $36.45.

Investors were also digesting the decision of the Bank of Japan not to slash interest rates further, after surprising markets back in January when it cut rates into negative territory for the first time. The BOJ left rates unchanged and didn’t boost its stimulus measures currently in place.

In pharmaceutical news today, we heard that shares of Valeant Pharmaceuticals International (VRX) suffered their worst one-day plunge ever, losing more than half their value after the embattled drug maker issued lower earnings and financial forecasts and outlined potential bond defaults that could affect the firm’s borrowing. Ouch!

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Going Sideways

Ulli Market Commentary Contact

Mon chart

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

The Dow, which is looking to extend its weekly winning streak to five, traded slightly higher as investors looked ahead to a key Fed meeting on interest rates later this week.

We have a big week ahead of us. The Federal Reserve meets Tuesday and Wednesday and Wall Street will be closely monitoring its policy statement on Wednesday to see if they raise interest rates or if they plan to in the near future.

It was a strange day in that crude oil got clobbered and lost over 3.5% while equities decoupled and held firm. The S&P 500 is now bouncing around its 200-day moving average and it remains to be seen whether this level can be conquered or act as glass ceiling. If the S&P 500 breaks through to the upside, major resistance will come in around the 2,045 mark, a level which might coincide with a new potential Domestic Buy signal.

So far, this rally is still considered a bear market rebound, and it’s questionable whether it will have enough legs to push back into bull market territory. But, as we’ve seen in the recent past, all it takes is some headline hockey to cause the computer driven algos to push the indexes higher regardless of underlying fundamental realities.

One well-known hedge fund manager put it this way: The upside is maybe 2% while the downside is 20%. We’ll have to wait and see if he’s right.

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ETFs/Mutual Funds On The Cutline – Updated Through 03/11/2016

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 154 (last week 99) 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. 41 ETFs (last week 22) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 104 (last week 59) above the line and 676 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.

One Man’s Opinion: Has The European Central Bank Failed To Boost Economic Growth In The EU?

Ulli Market Review Contact

ManCentral banks around the world, especially the European Central Bank (ECB), have done a pretty good job of preventing the downside, but they really have not kicked up the upside with respect to economic growth, said John Silvia, chief economist at Wells Fargo Securities.

Both growth and inflation expectations have been lower over time. There have been contradictions in the ECB’s stance; ECB chief Mario Draghi says at one point in time the ECB would do whatever it takes (to protect the euro), and at his latest press conference he said the central bank is done doing anything with respect to interest rates. Evidently, there’s a contradiction there and there’s a communications problem about what Draghi is really telling people, he noted.

Following Draghi’s statement, the euro strengthened – an outcome that the ECB surely had not hoped for.  Similarly, the yen unexpectedly strengthened following the Bank of Japan’s policy announcement. Asked if the market’s losing confidence in the policy path of central banks, John said the markets are sensing that whatever the policy move is at the present time, it’s far less effective than what people might think otherwise, or what the central bankers themselves think.

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New ETFs On The Block: Guggenheim Total Return Bond ETF (GTO)

Ulli Bond ETFs Contact

percentageActively managed exchange-traded funds have failed to capture investors’ imagination in the US despite the overall ETF industry growing apace with assets under management crossing $2 trillion in 2015. Actively managed fixed income funds, however, have fared better by cornering two-thirds of the $24 billion overall active niche.

New York-based Guggenheim Partners – the eighth largest US ETF issuer, recently expanded its fund offerings with the launch of the Guggenheim Total Return Bond ETF (GTO).  The actively-managed GTO shares most of the fund managers with its mutual fund cousin – the Guggenheim Total Return Bond Fund (GIBAX), and targets investment-grade bonds across sectors.

Actively managed bond ETFs have lately found favor with investors amid heightened market volatility and an ultra-low interest-rate environment. Jeffery Gundlach’s SPDR DoubleLine Total Return Tactical ETF (TOTL) gathered $2 billion in assets in 2015, more than any new ETF last year. GTO will compete with TOTL and another popular active bond ETF – the PIMCO ETF Trust (BOND). The new fund, like its competitors, will use the Barclays Aggregate index as a target for sector duration and a benchmark for the broader fixed-income segment returns.

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ETF/No Load Fund Tracker Newsletter For March 11, 2016

Ulli ETF Tracker Contact

ETF/No Load Fund Tracker StatSheet

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https://theetfbully.com/2016/03/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-03102016/

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Market Commentary

OIL DRAGS MARKETS HIGHER

Fri pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

The rebound rally continued and sent stocks to their highest point of the year as oil prices jumped and investors continued to assess the European Central Bank’s additional stimulus measures. After yesterday’s disappointment, today it was all euphoria and “risk-on” as the bull market celebrated its seventh anniversary this week leaving the Dow and S&P at their highest closes since the end of 2015.

Perhaps what is even more significant is that, with the big gains today, the Dow and S&P 500 have almost wiped out losses to date, with the Dow down 1.2% and the S&P down 1.1%.

The impetus for the surge in stocks today came from oil, which rallied after the International Energy Agency said “there are signs that prices might have bottomed out.” In its monthly oil market report, the Paris-based organization that represents the world’s major oil-consuming nations, said supplies dropped in February by 180,000 barrels per day. But it also noted a sharp slowdown in demand growth, particularly in the United States and China. Given the fundamentals, I won’t hold my breath in regards to a bottom in oil having been formed already—or in equities for that matter.

Be sure to review section 3 below for the exact timing of the next potential Domestic Buy signal.

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