May Proving To Be Unpredictable

Ulli Market Commentary Contact

Thur pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Stocks struggled to stay above ground today. Early morning movement was positive, however, roller coasters go up and they go down. The Dow was the only major index to finish in positive territory on the day.

U.S. produced crude prices are on the rise again as raging forest fires in Alberta, a key oil sands region, caused production shortages. Crude was up 0.8% to $44.16 after rising as high as $46.07 earlier in the trading day. S&P’s energy sector is up 0.5%, tracking the rise in crude prices to the upside.

Wall Street is looking ahead to the April jobs report, which is in queue for Friday at 8:30 a.m. ET. Analysts are forecasting that 200,000 new jobs were created last month, but a weaker-than-expected reading on new jobs created in the private sector is provoking investors to expect a lower number. Before Thursday’s opening bell, the number of Americans lining up for first-time jobless benefits jumped more than expected to 274,000, up 17,000 from the prior week.

Tesla shares dropped 5% today as investors expressed skepticism over the company’s plan to accelerate and ramp up deliveries of its electric vehicles. The stock has been volatile recently. Yesterday, shares jumped as much as 7% in after-hours trading after they announced Q1 earnings that showed a loss just slightly less than the Street forecast.

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Stocks Continue Slide Through Mid-Week As Bad News Is Bad News.

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Wed pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

U.S. stocks fell again, which is in line with the trend for the week thus far as for a long overdue change bad news is recognized as bad news.  Investors are pondering weaker-than-expected readings on job creation in the private sector last month, mixed with good news on the services sector of the economy. The slide today extended yesterday’s sell-off, which has pushed the Dow to a three-week low.

In economic news, payroll processor ADP said private employers created 156,000 new jobs in April, far below expectations of close to 200,000. The weak number raised concerns that the April jobs report released Friday by the government might also fall shy of the 200,000 estimate. Growth fears and overseas news also weighed on equities. Investor sentiment was hurt when a key Chinese manufacturing data point for April came in weak, causing growth fears to resurface once again.

On the plus side, the Institute for Supply Management’s April reading on the non-manufacturing part of the economy, or services sector, came in strong at 55.7, topping estimates of 54.8. March factory orders also topped analysts’ expectations, rising 1.1%. The nation’s trade deficit also narrowed in March to $40.4 billion.

A new worry-point for Wall Street is the recent strength in foreign currencies vs. the dollar. The yen is trading at an 18-month high vs.the greenback, which is likely to put further pressure on Japanese exporters and adding to angst over growth. The euro has also been climbing, putting a strain on eurozone firms that sell stuff abroad. We are also dealing with a stalled economy, with first-quarter GDP coming in below expectations at 0.5%.

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Bummer Of A Tuesday After Hyped Monday

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

U.S. stocks fell on Tuesday, following weak manufacturing data from China. Stocks reversed course and gave back all of the solid gains achieved on Monday.

The lack of economic growth, here in the U.S., which I have alluded to in the past, continues to put a damper on financial markets. U.S. GDP, for example, logged a weak 0.5% in the initial read for Q1. Also, talk of a U.S. economy in so-called stall speed, coupled with contracting corporate earnings and continued uncertainty over central bank policy moves around the world, has held U.S. stocks back recently.

In stock specific news, iPhone maker Apple (APPL) was hoping to break an eight session losing streak, its longest since 1998. Apple shares are down 11% so far in 2016 and have tumbled nearly 13% in its eight-session slide. In early trading, Apple shares jumped 1.9% to $95.41.

On the earnings front, drug-maker Pfizer (PFE) topped quarterly earnings forecasts by 12 cents. Its shares were up sharply, rallying 3.2%.

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Positive Start To May After Hectic April

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Today marks the first trading day of May, and ushers in what has historically been the worst six-month stretch for stocks. And while there’s no denying that history shows the May-through-September period delivers far lower stock returns than the more bullish October-through-April time frame, implementing this rather extreme market-timing approach to investing might be a bit of overkill. After all, we prefer letting our Trend Tracking Indexes (TTIs) and trailing sell stops be our guide to market exposure.

The S&P 500 remains above 2,000 and the DOW keeps flirting with 18,000. U.S. Crude also has maintained a steady climb to $45.00 a barrel but got pulled off its lofty levels today.

To kick off the month in economic news, a gauge of U.S. factory activity fell in April as U.S. macro data continue to slump and China data weakens.

In earnings news, Cisco (CSCO) reported better-than-expected Q3 results as volume rose and the firm’s cost-cutting measures took hold.

With earnings season pretty much over, investors are keeping their eyes on the upcoming summer months to see how currency issues and oil prices (which are on the rise) will impact markets.

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ETFs/Mutual Funds On The Cutline – Updated Through 04/29/2016

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 300 (last week 330) 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 367 (last week 433) above the line and 413 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: Will The Federal Reserve Finally Hike Rates In December?

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ManMorgan Stanley is predicting 3-4 percent earnings growth in 2016 and in 2017, said Adam Parker, chief US equity strategist and director of quantitative research at Morgan Stanley.

If investors go out a year from now and pay 16 times for the earnings month 13 to 24, roughly the S&P should be at 2050. The S&P is currently trading 2-3 percent above 16 times earnings, maybe somewhat more optimistic earnings 13-24 months from now.

Morgan Stanley believes the market has come a long way in the rally and the view was more optimistic when the markets were lower in January-February; obviously the risk-reward scenario is getting more balanced now. Investors need to focus on two points macro-wise: One – will the Chinese economy continue to look like it is recovering or will it slow; Morgan Stanley’s answer is it would slow.

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