Stocks Begin November With A Bang And A New Buy Signal For Domestic Equities

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

U.S. stocks kicked off November with nice rally as investors reacted to a batch of corporate deals, fresh economic data and anticipate another big week of corporate earnings. For first time since Aug. 18 the S&P 500 closed above 2100. The index is now at 2104.05 nearing its all-time closing high of 2130.82.

In earnings news, shares of Mexican chain Chipotle Mexican Grill (CMG) ended down 2.5% after the company closed some restaurants out West in response to reports of suspected E-coli infection traced to its restaurants in Washington and Oregon.

After watching our Domestic Trend Tracking Index (TTI) hover slightly above its long-term trend line for 6 consecutive days, today’s breakout confirms the newly developed trend, which makes a new Buy signal for “broadly diversified domestic equity funds/ETFs” effective as of tomorrow. As the rally gained steam, I took the opportunity early this morning to add to some of our sector positions, which I established last week. For more details, please see section 3 below.

Equities were mixed around the globe. Shares in China and Hong Kong were dragged down by the weak manufacturing data out of mainland China, with its so-called PMI coming in line with forecasts at 49.8, which signals a contraction.

All of our 10 ETFs in the Spotlight joined the rally and closed higher led by Healthcare (XLV) with +2.04%, while Consumer Discretionaries (XLY) lagged with +0.46%.

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ETFs/Mutual Funds On The Cutline – Updated Through 10/30/2015

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 91 (last week 103) 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 97 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. 18 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 226 (last week 223) above the line and 574 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: Are Inventory Fluctuations Part Of Business Cycles?

Ulli Market Review Contact

Man

The latest headline gross domestic product number might be disappointing, but beyond the visible decline there is positive story as consumer spending was robust and businesses were still investing – albeit at a slower pace than what was witnessed in the second quarter, said Lindsey Piegza, chief economist at Stifel Fixed Income.

The big question, however, remains if the US economy is going to continue the momentum from here as durable goods orders have tumbled after taking a wrong turn and it’s likely to be a struggle now for the economy going forward to maintain current year’s 2 percent growth pace as the year-end approaches, which would be a major concern for the Federal Reserve, she noted.

The third-quarter GDP reading slumped due to the drawdown in inventories, which indicates CEOs are concerned about building up too much stockpiles. Asked why CEOs would be nervous about higher inventories, Lindsey said companies are concerned about the modest gain in consumer spending; annual consumer spending growth now stands at 3 percent and without remarkable gains in hiring along with strong income growth, consumer spending is poised to decline from here.

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New ETFs On The Block: ProShares MSCI Europe Dividend Growers ETF (EUDV)

Ulli Dividend ETFs Contact

EuropeProShares, the largest US provider of alternative exchange traded funds, recently launched a so called smart-beta fund that targets European companies with a proven track record of growing dividends.

While the global economic turmoil, including China’s slowdown, has hit European companies hard, when it comes to paying dividends they don’t disappoint investors – as of August 31, 2015, the dividend yield of the pan-European STOXX Europe 600 Index stood at 3.4 percent compared to S&P 500 benchmark’s little over 2 percent and 2.2 percent for the MSCI USA Index. That said there’s no denying the significant weakening of the euro this year has helped European companies absorb some of the shocks.

The newly launched ProShares MSCI Europe Dividend Growers ETF (EUDV) tracks the MSCI Europe Dividend Masters Index, which screens the universe of the parent index – the MSCI Europe. MSCI Dividend Masters Index selects stocks based on their payout history over the past 10 years and companies that have managed to grow dividends year-over-year are included in the index.

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ETF/No Load Fund Tracker Newsletter For October 30, 2015

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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/2015/10/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-10292015/

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Market Commentary

A STRONG MONTH FOLLOWED BY A WEAK ENDING

Fri pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

While October might go down in history as the month that made up for all the losses since August, this week we saw mainly sideways activity with an ugly close today.

Central banks were the dominating market force this month as most economic data points disappointed generating more speculation that an interest rate hike may not be as imminent as had been feared. In the end, that is all that markets need these days in order to bounce back to keep the bullish trend alive.

Actual macro data appear to be no longer of any importance as a poor US jobs report along with a weakening dollar kept the low interest rate dream alive. Helping matters was continued weak global growth, which prompted the ECB to hint at the possibility of more stimulus causing equities to stay in rally mode.

Only 2 of our 10 ETFs in the Spotlight closed up led by Consumer Discretionaries (XLY) with +0.21%. On the downside, the Financials (IYF) gave back the most by surrendering -1.29%.

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Weekly StatSheet For The ETF/No Load Fund Tracker Newsletter – Updated Through 10/29/2015

Ulli ETF StatSheet Contact

ETF/Mutual Fund Data updated through Thursday, October 29, 2015

TOC 101515

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 8/24/2015

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) by a scant +0.46%, which is not a clear enough break to the upside to generate a new “Buy” signal. Please see the daily blog posts for more details.

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