May Marks 3rd Straight Positive Month

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Although markets did little to impress in the first day of trading after the holiday weekend, the gains from last week were enough to maintain a positive month overall for May. This marks the third straight month of gains for the S&P 500 for a grand total of +1.8%.

Today, we heard mixed news on consumer health here in the U.S. April income rose 0.4% and spending jumped 1%, which was more than analysts’ had forecast. However, consumer confidence in May disappointed. The Conference Board reported that the May confidence reading came in at 92.6, below April’s 94.7 level and below the May estimate of 96.1. Manufacturing contracted and Chicago PMI came in below expectations; nothing but weak data that might not give the Fed the warm fuzzies when considering a rate hike later this month.

During May, stocks got a hearty lift from oil surging above $50 per barrel for the first time since October. The $50 per barrel target price is something to keep an eye on as we head towards the summer months unless, of course, oil prices collapse again like they did last summer.

Later this week, Wall Street will be closely watching a key monetary policy meeting of the ECB and an OPEC gathering, although analysts don’t expect any announcement on oil production cuts in the imminent future.

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ETFs/Mutual Funds On The Cutline – Updated Through 05/27/2016

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 338 (last week 265) 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. 80 ETFs (last week 62) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 322 (last week 261) above the line and 458 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: SEC – Do Your Job!

Ulli One Man's Opinion Contact

ManIt looks like the SEC is finally ready to put a stop to accounting shenanigans.

The Securities and Exchange Commission is finally going to do its job and put a stop to the accounting hanky-panky that artificially inflates profits.

According to Dow Jones, the SEC is getting ready to step up its scrutiny of companies’ “homegrown earnings measures,”signaling it plans to target firms that “inflate their sales results and employ customized metrics that stray too far from accounting rules.”

Pro Forma Earnings vs. GAAP

Pro Forma earnings are when you adjust for unusual, non-recurring, one-time expenses. Examples:

  •  Minus or “ex” one-time costs of layoffs
  •  Minus or “ex” one-time costs of an asset write-down
  •  Minus or “ex” one-time costs associated with a takeover
  •  Minus or “ex” one-time costs of currency losses

But corporate America’s creative use of Pro Forma accounting rules has made them appear more prosperous than they really are—because the use of “extraordinary items” and “non-cash charges” has turned corporate earnings reports into a bag of lies.

So, the SEC is waking up to the misleading picture that pro forma earnings—compared to generally accepted accounting principles, or GAAP—generate. Now the commission is launching a campaign to crack down on made-to-order earnings.

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New ETFs On The Block: REX VolMaxx Long VIX Weekly Futures Strategies ETF (VMAX)

Ulli Volatility ETFs Contact

95551488REX Shares, the fairly new entrant in the exchange-traded funds space promoted by industry veteran Greg King, recently launched two products that focus on volatility of the broad-based large-cap US equity market.

The REX VolMAXX Long Weekly Futures Strategies ETF (VMAX) aims to provide exposure to the implied volatility of the broader large-cap US equities by investing in VIX futures-contracts with less than 30-day to expiry.

The actively-managed VMAX offers exposure to short-term futures contracts on the CBOE Volatility Index or SPX VIX, also known as the fear index. VIX is a reference for implied volatility of options on the S&P 500 with an expiry of 30 days and is calculated from a wide range of call and puts. An index value of 20 indicates the implied volatility of 30-day options on the S&P 500 is estimated as 20 percent.

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ETF/No Load Fund Tracker Newsletter For May 27, 2016

Ulli ETF Tracker, Uncategorized Contact

ETF/No Load Fund Tracker StatSheet

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https://theetfbully.com/2016/05/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-05262016/

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Market Commentary

STOCKS POST SOLID GAINS FOR THE WEEK; ARE THE BULLS BACK?

Fri pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Markets posted modest gains today, but it was just enough to push the major indexes above water to a weekly gain and snap a 3-week losing streak.

As I mentioned yesterday, the Friday before Memorial Day is notoriously slow and was so today, despite a market-moving announcement from Janet Yellen in Massachusetts.

In her speech, she noted that it is “appropriate” for the Fed to “gradually and cautiously” increase interest rates “in the coming months” if the economy and labor markets continue to show improvement. Her comments fell in line with the lingering rhetoric over the past month that a rate hike is coming, perhaps in early June. That should have been a negative for the indexes but wasn’t. Does that mean the bulls are back? It’s a possibility, but in the absence of volume supporting such a rally, it may only be a bounce from an oversold position.

Another way to look at it is that the markets have not made a new high within the last year. History suggests that when that happens, the odds are 77% in favor of a bear market. This means you should be not only conservative when setting up new positions but always use my recommended sell stop discipline in case this turns into a bull trap. The indexes are still disconnected from reality as this chart from ZH makes abundantly clear:

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Weekly StatSheet For The ETF/No Load Fund Tracker Newsletter – Updated Through 05/26/2016

Ulli ETF StatSheet Contact

ETF/Mutual Fund Data updated through Thursday, May 26, 2016

TOC040716

If you are not familiar with some of the terminology used, please see the Glossary of Terms.

 

1. DOMESTIC EQUITY MUTUAL FUNDS/ETFs: BUY — since 4/4/2016

TTI

Our main directional indicator, the Domestic Trend Tracking Index (TTI-green line in above chart) remains above its long term trend line (red) by +1.76% after having generated a new Domestic Buy signal effective 4/4/2016 as posted.

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