Stocks ‘Gearing Up’ For A ‘Winter Hike’

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Stocks jumped Tuesday with the Dow gaining 157 points as the price of crude oil rallied for a second day and Wall Street awaits the Federal Reserve’s decision Wednesday on interest rate hikes.

The Federal Reserve kicked off its two-day policy meeting Tuesday, and futures are pricing in a roughly 80% chance the Fed will hike interest rates for the first time since 2006. The general consensus on Wall Street is that Yellen will reassure markets that the pace of increases in 2016 will be very slow and deliberate, a so-called dovish message that would reduce some of the angst and fallout of any rate hike. Depending on the wording, we could see more upside momentum in form of a relief rally.

Apple (AAPL) has been stealing headlines over the past two days, not because of snazzy new products, but rather that the stock has been falling hard. Shares continued to drop today and have disappointed over the last 30 days, rising just 0.2%, which is miniscule compared to other tech stocks that have been rallying. The latest concern to hit Apple shares came Monday after Morgan Stanley cut its outlook for Apple smartphone sales. Morgan Stanley now sees smartphone shipments to fall 6% in the current fiscal year.

All of our 10 ETFs in the Spotlight gained as the rebound from an oversold condition continued for a second day. Leading the pack were the Financials (IYF) with +2.16% while Consumer Discretionaries (XLY) lagged with +0.55%.

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Stocks Gain Ahead Of Fed Meeting; Oil Edges Higher

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Stocks climbed at the last minute today ahead of Wednesday’s expected Fed rate hike as oil prices found some stability and edged higher.

Oil sold on U.S. markets is priced slightly above $36 a barrel, up 1.7%, after futures slipped to below $35 a barrel earlier in the day. In recent days, the prices for oil in the U.S. and for Brent crude, from the North Sea, have hit six- and seven-year lows, respectively.

Shell (RDS) says it is cutting 2,800 jobs in a pre-planned administrative move, but that the job cuts, amounting to 3% of its workforce, have more to do with the company finalizing its takeover of British-based BG Group, not oil prices.

This week brings the equivalent of the Super Bowl for economists, with the Federal Reserve all but certain to raise interest rates for the first time in nearly a decade. Much of the drama after Wednesday’s meeting will revolve around the signals Fed policymakers send about the pace of subsequent hikes. Before it acts, however, the Fed will review a final batch of economic reports on inflation, housing and industrial production.

9 of our 10 ETFs in the Spotlight edged higher as the markets rebounded into the close. Consumer Staples (XLP) led with +1.05% while the Mid-Cap Value ETF (IWS) slipped -0.40%.

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ETFs/Mutual Funds On The Cutline – Updated Through 12/11/2015

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 36 (last week 110) 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 some 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. 10 ETFs (last week 18) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 56 (last week 293) above the line and 744 below it out of the 800 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 A Sudden Jump In Wage Growth Trigger Faster Rate Hikes?

Ulli Market Review Contact

ManThe US economy is likely going to be in the backdrop of a flatter yield curve for quite some time because the Fed is going to be raising rates, but they are going to be telling the markets that their end game is probably much lower than where they thought it was, said Ellen Zentner of Morgan Stanley.

A lot of the activity that is being witnessed up to the rate hike could be the anticipation of higher rates, but rates are not going to rise that much. So, it’s unlikely higher rates would be very restrictive to economic activities overall, certainly not when the balance sheets of households are considered, very little of which is subject to a variable rate.

Morgan Stanley thinks the economy takes higher interest rates and markets very well next year, she noted.

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New ETFs On The Block: Loncar Cancer Immunotherapy ETF (CNCR)

Ulli Sector ETFs Contact

InvestingTaking a plunge into the healthcare sector when it’s fighting with a huge image problem requires courage. Moreover, when the investment product targets the biotech sector – which recently witnessed a big sell-off amid a raging drug-pricing controversy, questions are bound to be raised about the timing.

But for Brad Loncar, the Kansas based former budget manager in the international affairs division at the US Department of Treasury and a full-time biotech investor for over eight years, the time was ripe to give investors access to a very hot slice of the biotech sector – cancer immunotherapy.

For the uninitiated, immunotherapy involves manipulating the human body’s immune system to target and kill the cancerous cells, malignant or otherwise. Since the body’s own defence system is activated against carcinogenic cells, immunotherapy is far more potent and safe than traditional surgery and chemotherapy. Indeed, immunotherapy products can bring revolutionary breakthroughs and bring a paradigm shift in cancer treatment.

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ETF/No Load Fund Tracker Newsletter For December 11, 2015

Ulli ETF Tracker Contact

ETF/No Load Fund Tracker StatSheet

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THE LINK TO OUR CURRENT ETF/MUTUAL FUND STATSHEET IS:

https://theetfbully.com/2015/12/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-12102015/

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Market Commentary

NOT AN IDEAL WAY TO ROUND OUT THE WEEK

Fri pic 

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

The stock market capped off its worst week since August today as oil prices set a new seven-year low and investors braced for the increasing certainty that the Fed will boost short-term interest rates next week.

Apparently, Wall Street is interpreting the selloff in oil prices due to weak economic demand. A barrel of U.S. oil lost 3.5% to about $35.50, a level last seen in early 2009. Weak oil prices are hammering the profits of energy companies, which are a big component of the S&P 500 companies’ total profits.

The market has grown increasingly volatile over the past three months as investors look ahead to next week’s meeting of the Fed’s policy-making committee and what the central bank has signaled will likely bring its first interest rate hike in nearly a decade. Record-low interest rates near 0% have been one of the major fuels for the bull market in stocks since 2008, which is now well into its seventh year.

In tech news, GoPro (GPRO) shares continued climbed higher Friday following an analyst report suggesting the high-def camera maker could be an acquisition target for Apple (AAPL). On Thursday, FBR Capital Markets analyst Daniel Ives listed GoPro among possible companies Apple could acquire next year. Also on the list: software maker Adobe, cloud company Box and electric car maker Tesla.

All of our 10 ETFs in the Spotlight hid the skids today and closed lower. The loser of the day was the Discretionary ETF (XLY) with -2.28%. Resisting the sell-off the best was Consumer Staples with a loss of -1.10%.

We have now clearly slipped back into bear market territory, as section 3 below shows, and a 100% cash position is my preferred choice.

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