New ETFs On The Block: Elkhorn FTSE RAFI US Equity Income ETF (ELKU)

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Investing

Elkhorn Capital Group, the exchange-traded fund issuer founded by former PowerShares’ veteran Ben Fulton, launched its second fund recently with an eye on high-dividend paying US companies.

The newly launched Elkhorn FTSE RAFI US Equity Income ETF (ELKU) employs an investment strategy created by Research Affiliates, one of the pioneers of the so-called smart-beta investing.

ELKU tracks the FTSE RAFI US Equity Income Index, a gauge derived from the FTSE US All Cap Index and jointly developed by Research Affiliates and FTSE Russell. The index aims to offer risk-managed exposure to high dividend paying US companies after screening fundamentals.

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ETF/No Load Fund Tracker Newsletter For January 29, 2016

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ETF/No Load Fund Tracker StatSheet

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

https://theetfbully.com/2016/01/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-01282016/

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Market Commentary

A BITTER SWEET END TO A GRIM JANUARY

Fri pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

The Dow, posting its worst January since 2009, ended up nearly 400 points to cap a turbulent month on an upbeat note after a surprise interest rate cut by the Bank of Japan and despite a report showing weak fourth-quarter U.S. growth.

It appears that the Dow is still in correction mode, or down more than 10% from its peak. A weak January typically does not bode well for stocks for the remainder of the year. As the saying on Wall Street often says: “As January goes, so goes the market” for the rest of the year.

The big and unexpected headline Friday was a move by Japan’s central bank to push interest rates into negative territory (NIRP) in an effort to boost economic activity, combat dangerously low inflation and spur more bank lending. The Bank of Japan followed the policy path of the European Central Bank, in pushing the rate for deposits down to -0.1% for current financial firms that have cash deposited at the BoJ. A negative interest rate means depositors pay the bank to keep their money at the bank.

Of course, as we all know by now pushing rates to zero or even negative has done nothing to spur organic economic growth in the past, but it has done everything to support the financial markets. I suspect that today’s euphoric reaction will give way to reality in the near future and this day may very well be remembered as one to get out of the markets before the bear rears its ugly head again.

All of our 10 ETFs in the Spotlight participated in today’s buying panic and closed higher. The top dog of the day was the Financials (IYF) with +3.09%, while Consumer Staples (XLY) lagged with +1.09%.

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Weekly StatSheet For The ETF/No Load Fund Tracker Newsletter – Updated Through 01/28/2016

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ETF/Mutual Fund Data updated through Thursday, January 28, 2016

TOC010716

If you are not familiar with some of the terminology used, please see the Glossary of Terms.

 

1. DOMESTIC EQUITY MUTUAL FUNDS/ETFs: SELL — since 11/13/2015

TTI

Our main directional indicator, the Domestic Trend Tracking Index (TTI-green line in above chart) has recently crawled above its long term trend line (red) and finally generated a new “Buy” signal effective 11/3/15. The market subsequently dropped, and we exited again on 11/13/15. As of today, the TTI remains below its trend line by -3.11%, which means we are in cash on the sidelines.

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Oil Feeds The Markets

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Thur pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Stocks ended higher in choppy trading as oil prices rose for a third straight day and moved above $33 a barrel. The major indexes posted gains early as strong corporate earnings reports provided a boost which quickly evaporated before equities mounted another comeback.

In earnings news, Amazon (AMZN) missed Wall Street expectations, sending shares for a dive (-13%) in after-hours trading trading. The Seattle retailer reported $1 earnings per share on sales of $35.7 billion. The consensus earnings estimate has been $1.58 per share on revenue of $35.98 billion.

News in oil prices continued to grasp headline slots today, as the price of oil gained a whopping 4.33%. The bullish buy-in for oil futures came when swirling speculation that the Organization of the Petroleum Exporting Countries (OPEC) could slash production. Still, even if OPEC reduces production, macroeconomic concerns, such as the sluggish economy in China and the deteriorating situation in Brazil, are likely to continue to keep prices at low levels compared to recent yearly averages.

8 of our 10 ETFs in the Spotlight managed to close on the plus side with Consumer Staples (XLY) gaining +1.28%. The loser of the day was Healthcare (XLV), which got clobbered at the tune of -2.33%.

Let’s see if there is more fallout from the Amazon debacle tomorrow.

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Volatility Slams Markets; Facebook Keeps Face

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Wed pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Stocks dove sharply into negative territory after the Federal Reserve signaled that it has not ruled out another interest rate hike at its March meeting despite noting that it is “closely monitoring” recent turbulence in financial markets and the global economy.

All major indexes fell at least 1.1% today, with the Nasdaq posting a striking 2.18% loss.

Wall Street had been hoping the Fed would use its post-meeting January policy statement to send a different message: that it would, in effect, dial back the prospect for a rate hike at its March meeting and lower the likelihood of four quarter-point hikes in total for the year. But the Fed didn’t go that far or wasn’t “dovish” enough, disappointing investors who responded by dumping stocks as the question marks related to Fed policy remained open.

In earnings news, Facebook (FB) shares just shot up 8% in after-hours trading after the giant social network said it earned 79 cents a share on revenue of $5.84 billion in Q4 2015, easily topping Wall Street estimates of 69 cents a share. Facebook is grabbing a larger share of a growing digital advertising market. Facebook will capture $9.86 billion in U.S. display ad revenue in 2016 for a 30.6% share of total spending in that market, says research firm eMarketer.

In airlines, we heard today that Boeing Co. (BA) reported $1 billion in Q4 2015 earnings, a 30% drop from a year earlier, due to sluggishness in the air cargo market. The company said it expects 2016 core earnings between $8.15 a share and $8.35 a share. Analysts were expecting $9.41 a share. The company’s stock closed down 9% to $116.58 a share.

All of our 10 ETFs in the Spotlight headed south after a 2-day bounce and closed in the red led by Consumer Discretionaries (XLY) with -1.56%. Resisting the sell-off the best was Consumer Staples (XLP) with a modest loss of -0.10%.

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Oil Reverses And Pulls The Major Indexes Higher

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Tue pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

In a stunning reversal from yesterday’s sell-off, the likes of which I have described as typical in bear markets featuring big down days followed by big updays without clear long-term direction, oil rallied and pulled the indexes out of the doldrums with the S&P 500 reclaiming the 1,900 level. To be fair, strong earnings results from Johnson & Johnson, Proctor & Gamble as well as 3M contributed to today’s rebound.

Crude conquered the $31 level again on hopes that OPEC might be able to get a handle on the ever increasing supply levels, which to me is wishful thinking as I can’t recall an instance in recent history when OPEC managed to agree on anything that lasted more than a few days. In the end, if inventories build again all of a sudden, we may see the pendulum swing the other way pulling equities back down.

Unless, of course, tomorrow’s Fed announcement, after its 2-day FOMC meeting, contains a new recipe for potentially lower interest rates or a much hoped for new Quantitative Easing (QE) program.

All of our 10 ETFs in the Spotlight joined the party and closed up with the leader being the Mid-Cap Value ETF (IWS) with +2.26% while the laggard was Healthcare (XLV) with +0.76%.

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