Back To “Correctional” Territory For Dow

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

After its recent hot streak, the Dow Jones industrial average dipped back into correction territory Tuesday as stocks tumbled amid a renewed slump in oil prices and a still uncertain outlook for global growth and U.S. corporate earnings. All major indexes dropped at least 1.1% on the day.

Hopes for a near-term oil production cut were dashed today when Saudi Arabia’s oil minister said a cut is not going to happen because many oil-producing nations likely would not do so, even if they agreed to cutting production. Bloomberg also reported that Iran’s oil minister shot down calls for a production “freeze,” calling such a plan “ridiculous.”

The news pushed oil prices down about 4.75% today to 31.90 a barrel for U.S. Crude.

Domestically, the bad news continued with new orders being crushed as the Richmond Fed Manufacturing survey dropped sharply to a level not seen since 2013. The Consumer Confidence number headed south as well from 97.8 to 92.2, which was its weakest since the middle of 2015.

In banking, we heard today that Citibank (C) was ordered to pay a $3 million penalty and provide nearly $11 million in consumer relief or refunds in a settlement over illegal debt sales and debt collection practices. The stock dropped 3.3% on the day.

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Short Squeeze Continues As Bad News Is Good News

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

After posting its best weekly gain in what has been a dismal start to 2016, stocks kicked off the new week in rally mode as investors reacted to rising oil prices and signs of alleged stability in China’s stock market. Well, there really was no stability but the naming of a new regulator to police the markets is supposed to be a sign that things are under control.

However, economic data points were horrible not just out of Europe but also domestically with the PMI (Purchasing Managers Index) showing the weakest numbers since 2012, so we’are back to the theme that bad news is good news.

Boosting market sentiment to start the week was a big jump in the price of U.S.-produced crude back above the key $30 per barrel mark, which pulled equities higher, however, crude oil news headlines were negative with falling demand and increasing supply framing the big picture. Shorts were squeezed again supplying the upward momentum for this move.

Last week, stocks rallied sharply as investors swooped in to pick up some bargains after the steep selloff to start the year. Wall Street also got a boost from news that Saudi Arabia, Russia and other major oil producers were considering a production freeze, a move, if it comes to fruition, is seen as the first step to stabilize oil prices.

With the S&P 500 now bouncing against overhead resistance in the 1,950 area, I would not be surprised to see the indexes shift in reverse or at least pause until new momentum is found to justify not only the current levels but also a break through this glass ceiling. Still, at this point this entire rebound is nothing but a strong bear market rally, and we need to see far more momentum to push our Domestic TTI (section 3) back into bullish territory.

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ETFs/Mutual Funds On The Cutline – Updated Through 02/19/2016

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 48 (last week 41) 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. 12 ETFs (last week 10) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 29 (last week 27) above the line and 751 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: Does The Market Indicate There’s A US Growth Problem?

Ulli Market Review Contact

ManThe overall pessimism about the US economy has not subsided as nominal GDP growth has been less than three percent, Q4-over-Q4 , and in that kind of world, corporate profits don’t grow very much, said Joe Lavorgna, chief US economist at Deutsche Bank.

People are focused on the labor market, which is a backward looking indicator; companies hired people, but unfortunately as they did that, the bottom dropped out so to speak, especially in manufacturing. It’s likely things will continue to slow, he noted.

The latest retail sales and unemployment reading came in stronger than anticipated. Asked to comment, Joe said retail sales numbers for the past three months are up three percent annualized, which is not a good number, especially given how low energy costs are and how much job growth the economy had.

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New ETFs On The Block: Reality Shares DIVCON Leaders Dividend ETF (LEAD)

Ulli Dividend ETFs Contact

InvestingAmid stock market turbulence and forecasts for a global slowdown, dividend ETFs look attractive to certain investors, particularly to those who are looking to park their money in relatively stable instruments. Besides the general attraction for quality dividend payers, investors also welcome the regular current income and some protection to capital gains offered by dividend stocks.

While 2015 witnessed solid dividend growth, many analysts forecast a difficult year for 2016. Financial data firm Markit predicts dividend growth to fall 5 percent on a constant currency basis, nearly half the 9.3 percent average growth witnessed in the previous four years.

That means investors need to be selective when picking dividend payers. The newly launched Reality Shares DIVCON Leaders Dividend ETF (LEAD) could be a natural choice in easing the stock picking pain.

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ETF/No Load Fund Tracker Newsletter For February 19, 2016

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/2016/02/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-02182016/

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Market Commentary

FLAT ON WALL STREET TODAY BUT UP FOR THE WEEK

Fri pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Stocks, perhaps a little winded by a massive rally earlier in the week, turned in an uninspiring showing today as investors reacted to softer oil prices and digested a fresh reading on inflation at the consumer level that could influence interest rate policy.

Despite the snoozer of a finish, all three market measures posted their biggest weekly gains yet in 2016. As the chart shows, the Dow gained 2.62% in the holiday-shortened week, the S&P rose 2.85% and the Nasdaq jumped 3.84%. The shorts have all been squeezed to cover, so we’ll have to see if there is another driver to continue the current upswing. My guess is that we’ll run out of steam pretty quickly, especially if oil heads south again.

In economic news, the January consumer price index, or CPI, was unchanged, a tad better than the 0.1% drop economists had forecast. The so-called core CPI, which strips out food and energy costs, rose a bigger-than-expected 0.3%, or a year-over-year pace of 2.2%. The stronger inflation reading could have implications for Federal Reserve interest rate policy, as a big reason the nation’s central bank has been holding off on more interest rate hikes is due to still-weak inflation readings.

Also today, tech investors were reacting to news that the board of troubled Internet Company Yahoo (YHOO) has formed an independent committee to explore “strategic alternatives,” which in Wall Street-speak normally means a potential sale may be in the works.

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