S&P 500 Falls Back Into Negative Territory For 2016

Ulli Market Commentary Contact

Thur pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Stocks fell despite a big earnings beat from retailer Wal-Mart (WMT)

Walmart (WMT) bucked the trend of many U.S. retailers this profit-reporting season, reporting that its earnings, revenues and sales all handily topped Wall Street’s estimates. Shares of the retailer gained almost 10% on the day. The positive news from the company suppressed fears that U.S. consumers are cutting back spending.

A better-than-expected quarterly profit report from Walmart offset some of the market’s lingering weakness sparked by the Federal Reserve on Wednesday, which noted to investors an interest rate hike might occur in June if U.S. economic data continues to strengthen.

U.S. crude was negatively impacted by the Fed statement that they are seriously considering their second rate hike since 2006 at its meeting next month. U.S. oil closed down at $48.60 a barrel.

The value of the USD continued to rise today, which is not in the best interest for exports. The rising valuation could negatively impact global sales of U.S. goods as they become more and more expensive. The currency is now once again at its highest level since March.

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Markets End Flat On FOMC Minutes

Ulli Market Commentary Contact

Wed pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Volatility was minimal as we closed out the mid-week trading day.

We heard earnings reports from Target (TGT) today, which disappointed investors to say the least. The company missed analyst’s estimates on Q1 sales while delivering a disappointing forecast for the Q2. Corporate said it expects sales in the second quarter to be from flat to down as much as 2% as shoppers pull back their spending. Baby, kids, style and wellness continue to be the largest revenue streams for Target.

In tech, Apple’s (AAPL) stock gained about 1% today, but is still trying to fight its way back from a tremendous drop from its April high of $109 a share. Investors have seen $240 billion in wealth evaporate in their Apple holdings since that time. Some hope the big losses in Apple’s market value will attract back investors who see it as a value.

I am keeping my eyes on economic data and how it will impact the Fed’s decision regarding interest rates. The minutes suggest that economic data over the next few weeks, particularly the May jobs survey, will be critical in determining whether the Fed hikes rates again in June.

In a statement after the April meeting, the Fed gave no clear signal about whether a rate hike at its mid-June meeting is likely yet today the words were “most Fed officials saw a June hike ‘likely’ if economy warranted,” leaving everyone confused as to what will happen next.

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Tuesday’s Slide Negates Monday’s Climb

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Today was a solid downward slide from yesterday’s gains on Wall Street, despite some good earnings reports from big players.

Inflation worries were spread all over news outlets today as we heard reports that April’s reading on consumer inflation (+0.4%) was the highest in three years. The move higher in inflation, due in large part to rising prices at the gas pump, is likely to heat up debate as to whether cost pressures are on the rise, a trend that could prod the U.S. Federal Reserve to raise interest rates at an earlier date than Wall Street now has priced in.

As I mentioned yesterday, this week is a big one for earnings reports and we heard some positive numbers from Home Depot (HD) today. The big home improvement retailer topped Wall Street estimates on both the top and bottom line and subsequently raised its full-year profit estimate. This somewhat suppressed fears sparked by weak retail earnings reports from Macy’s (M) and Nordstrom (NORD).

Still to come this week, is Target (TGT), Walmart (WMT), Gap (GPS) and FootLocker (FL) reporting later in the week.

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Temporary End To Losing Streak

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Coming off a three week losing streak, the stock market kicked off the new week in rally mode as investors eyed more retail earnings, digest news related to corporate deals and await Wednesday’s release of minutes of the Fed’s April meeting.

All three major indexes gained at least 1% on the day. The Dow’s rise was helped by a nearly 4% jump in shares of Apple (AAPL), after Berkshire Hathaway reported a $900 million stake in the iPhone maker in an SEC filing.

There was a notable amount of news in the M&A world today as well. Drugmaker Pfizer (PFE) announced it is buying Anacor Pharmaceuticals (ANAC) for $5.2 million. Gannett (GCI), parent company of USA TODAY, said it upped its bid for Tribune Publishing (TPUB) to $15 per share from an initial offer of $12.25. And Yahoo (YHOO) shares gained 2.7% amid reports that billionaire Warren Buffett and Berkshire Hathaway (BRK-A) might provide financing to Quicken Loans founder Dan Gilbert, who is said to be interested in buying the Internet company.

Wall Street is bracing for a busy week. The earnings parade will pick up Tuesday with results from Home Depot (HD), Lowe’s (LOW), Target (TGT), Walmart (WMT), Gap (GPS) and FootLocker (FL) reporting later in the week.

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ETFs/Mutual Funds On The Cutline – Updated Through 05/13/2016

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 242 (last week 263) 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. 55 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 261 (last week 290) above the line and 519 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: “We Are Unsure Whether To Wear A Helmet Or A Diaper” – Merger Arb Funds Crushed

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By ZeroHedge

Man

2015 was the year of M&A (Mergers & Acquisitions): some $5 trillion in global merger and acqusition deals were announced, the highest level ever, topping even pre-crash 2007. In fact, last year there were more mega-deals, those valued at $20 billion or above, than ever. In all, there were 17 deals at or above that value compared with 35 such deals in the five years from 2010 through 2014. Such was the cheap debt-fuelled boom in large deals that the average size of all M&A valued at $500 million or above was $3.3 billion, up from $2.2 billion in 2014.

However, as Bloomberg observes, this year M&A is hitting a more dubious record: deals gone bust as some 10%, or $504 billion, of all deals announced last year have been terminated following a furious crackdown by the US Treasury on tax inversions which killed what would have been the biggest M&A deal ever, Pfizer’s acquisition of Allergan, as well as numerous other deals found to have been anti-competitive by the FTC.

Wednesday was especially bad for bankers as two mergers valued at a combined $21 billion collapsed. The latest cancelled deals mean 2015 has been stripped of its title as the biggest year for deal-making, dropping to $4.06 trillion compared with 2007’s $4.09 trillion.

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