1. Moving the Markets
It it hadn’t been for a last hour turn-around, possibly a dead cat bounce, the major indexes may have headed for a steep dive. As it turned out, the worst was avoided for the time being, but this type of market action underscores what I have been saying since the middle of November—when our Domestic TTI broke below its long-term trend line—that a bear market has started and the only unknown is its magnitude and duration.
On the heels of Friday’s sell-off, the culprits remain the same in that crude oil continued its southerly path, European banks, especially Deutsche Bank, are in “fear” mode and, of course, the global economic slowdown has become all too real now.
Besides the Material Sector (-2.7%), Financials took a beating at the tune of -2.6%, however, energy was fairly resilient and closed up +0.1%. While the S&P 500 closed below its January closing low (1,859), it still remains above its January intra-day low of 1,812 which, once taken out will not bode well for equities in general. We’ll have to wait and see if and when we get there; in the meantime, I expect some rebound efforts followed by more downside moves.
9 of our 10 ETFs in the Spotlight headed south led by the Financials (IYF) with -2.63%. Only one survived the onslaught and that was the Dividend ETF (DVY), which actually managed to squeeze out a gain of +0.08%.
The US economy has been growing at 2 percent real and perhaps 2.9 percent nominal for the past several years, said Bill Gross, portfolio manager at Janus Capital Group.
Amid heightened market volatility and slumping Treasury yields, many investors have started to believe lower rates will linger for a bit longer, meaning dividend plays could make hay for an extended period while the Fed falters. Such a scenario may look ideal for a strategically timed new smart-beta product from Guggenheim Investments. 
