China, Korea Both Impacting U.S. Markets

Ulli Market Commentary Contact

Wed pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

2016 has been awful so far for the bulls, with the Dow logging its worst three-day stretch in a new year since the financial-crisis days of 2008. All major indexes closed at least 1.15% lower today and there were no signs of a change to come.

Some news agencies are blaming the market slide today on the news about North Korea having successfully tested a hydrogen bomb. Others say that the news only added to the already down trending market set in motion Monday when a major plunge in shares of mainland China stocks renewed global growth fears of the state of the global economy. I think certain realities, such as weak domestic economic data points and current lack of Fed support, are coming home to roost.

Adding to the market’s woes Wednesday was another sharp drop in the price of U.S. Crude Oil, which plunged 5.5% to below $34 a barrel amid the growing worries related to slowing growth.

As it related to energy, the biggest anchor on the Dow today was Chevron (CVX), showing that the woes in the energy patch continue. The stock dropped $3.54 to $86.07, which accounted for a decline of about 26 Dow points.

All of our 10 ETFs in the Spotlight hit the skids as well and closed in the red. Faring the worst was the Equal Weight S&P (RSP) with -1.83%. As could be expected, Consumer Staples (XLP) held up best by giving back only -0.34%.

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No Headaches For Investors Tuesday

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Wall Street entered the second day of trading of 2016 on the defensive as investors still reeled from a global stock sell-off Monday and evaluated the most recent steps taken by Chinese authorities to stabilize markets and reduce jitters.

Overnight, shares in mainland China stabilized with the help once again from government intervention in markets a day after a 7% plunge prompted an early halt to trading in what was the worst start to the year ever for China stocks.

Here in the U.S., we heard some positive news in the auto industry. Automakers posted a solid 9% sales gain in December, an exclamation mark that sealed 2015 as the biggest sales year ever for the industry. Automakers sold 17.47 million vehicles for the year, Autodata reported, besting what Kelley Blue Book reported as the previous record, which was 17.35 million in 2000. Low gas prices, cheap credit, low unemployment, soaring consumer confidence and warm weather fueled a rush into the showroom in December apparently.

And in tech, Investors hoping the Apple (AAPL) stock implosion would end this year are now clinging to what’s left of the triple-digit stock price. Shares of the iPhone maker closed down another 2.5%, or $2.64, Tuesday to $102.71. The once-hot stock is now careering toward the $100-a-share level — a price threshold bulls are hoping will finally hold. Apple’s stock hasn’t closed below $100 since late October 2014.

Our 10 ETFs in the Spotlight were mixed as the market attempted to bounce back with 8 of them closing higher, while 2 of them ended up in the red. Leading the charge to the upside was the Low Volatility ETF (SPLV) with +0.82%. On the downside, Consumer Discretionaries (XLY) gave back a minor -0.13%.

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New Year, Old Problems = Sour Start To 2016

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Stocks around the world plunged on the first trading day of 2016, with the Dow diving 470 points in intraday trading before moderating its losses amid fresh signs of slowing growth in China, the world’s second-biggest economy. All three major indexes got spanked as the chart above shows.

2016’s rocky beginning came as many of the same worries that held stocks back last year reappeared, prompting investors to sell equities and reduce risk.

China was the main culprit today, as we received a weaker-than-expected reading on Chinese manufacturing that showed continued contraction in one of the world’s most important economies. The lackluster numbers raised fresh fears about the global growth outlook for 2016 and the profit outlook for companies around the globe. It also sparked a massive stock market sell-off in mainland China, where shares tumbled more than 7%, forcing authorities to halt trading for the day before the normal closing time.

Fresh data in today on U.S. manufacturing added to investor fears about a global economic slowdown. An index of U.S. factory activity fell to 48.2 from 48.6, the Institute for Supply Management said Monday. That’s the lowest level since June 2009 and the second straight month of reading below 50, signaling contraction in the sector.

One bad day, even if it’s the first day of a new year, doesn’t mean that stock market returns will be horrific for the full year. It just signals that volatility is still present trailing from 2015 along with the uncertainty of what the effects of ever weakening economic data points will have on equities. Will have to wait and see if today was simply an outlier or the final nail in the coffin of a much overextended bull market.

All of our 10 ETFs in the Spotlight followed the theme of world markets and closed down. Giving back the most was the Financials (IYF) with -1.92% while the Dividend Select ETF (DVY) held up best with -0.79%.

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ETFs/Mutual Funds On The Cutline – Updated Through 12/31/2015

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 56 (last week 55) 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. 9 ETFs (last week 12) 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 83) 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 Equities See Muted Gains In 2016?

Ulli Market Review Contact

ManThe year 2016 is likely to see a slow start, similar to what was witnessed in the last couple of years, due to some additional slowdown in manufacturing, said Mark Vitner, senior economist at Wells Fargo Securities.

The forward looking data on manufacturing is still pointing to additional deceleration – new orders data looks horrible, while the US economy failed to record any growth in industrial production in 2015. A lot of people try to minimize the troubles in the factory-sector arguing manufacturing is a small part of the economy, but it still accounts for the bulk of the swing in GDP from quarter-to-quarter.

While the general-consensus economic growth for 2016 is 2-2.5 percent, Wells Fargo Securities thinks weak manufacturing could be the biggest obstacle to achieving that target, he noted.

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