Seven Day Streak Snapped; Earnings Disappoint

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

The Dow’s seven day winning streak was snapped today as stocks sank on fresh data showing China’s economy is slowing and investor angst amid the third-quarter earnings season.

The latest news out of China reaffirms fears of a slowdown in the world’s second-largest economy and again has everbody wondering whether the slowdown in Asia will dent business activity in the United States and Europe as well. I am not sure why there is any uncertainty; of course it will affect the rest of the world; the question to me is only the magnitude of it.

Still, Wall Street is mainly focused this week on the Q3 earnings season. Investors are split on how the earnings season will impact the stock market, which has rallied more than 7% from its lows back in late August.

After the closing bell, we heard from both JPMorgan Chase (JPM) and Intel (INTC). For both companies, it was a mix of good and bad news when it comes to revenue and earnings. JPMorgan Chase impressed with better than expected earnings, but the company’s revenue came in lower than expected, mostly due to a drop in its mortgage banking business. Intel, like JPMorgan, impressed with higher than expected earnings, but their revenues also fell short of expectations.

All of our 10 ETFs in the Spotlight retreated and headed south as the indexes slipped. Leading the pack to the downside was Healthcare (XLV) with -1.25% while the Dividend ETF (DVY) fared the best by only giving back -0.51%.

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Markets Keep Climbing On Columbus Day

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

The Dow Jones industrial average, coming off its biggest weekly gain since February, ended modestly higher to post its seventh-straight session of gains as Wall Street awaited the barrage of corporate earnings reports, which begin tomorrow. The S&P 500 and Nasdaq both performed well today also.

The question remains: “Is this a new bull market or a bear market bounce?” While there are many viewpoints, I believe that until we actually see a crossing of our Domestic Trend Tracking Index (TTI) into bullish territory, this is nothing but a dead cat bounce, although one of great magnitude. Only time will tell whether a new bullish cycle is in the making.

Wall Street was also digesting a big deal in the tech sector, where Dell (DELL) teamed up with MSD a private equity firm Silver Lake to purchase data storage player EMC for $33.15 per share in a blockbuster cash and stock deal valued at more than $67 billion. The deal is notching its place in history as the biggest ever in the tech sector.

As I mentioned last week, most investors are anxiously awaiting corporate earnings this week from some of the big financial institutions, such as JP Morgan (JPM), Wells Fargo (WFC), Citigroup (C) and Bank of America (BAML). We will hear from Johnson & Johnson (JNJ) and Intel (INTC) on Tuesday.

7 of our 10 ETFs in the Spotlight headed north with the leader being Consumer Discretionaries (XLY) at +0.48%. On the downside, Mid-Cap Value (IWS) lost a scant -0.24%.

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ETFs/Mutual Funds On The Cutline – Updated Through 10/9/2015

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 41 (last week 18) 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.

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. 7 ETFs (last week 4) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 49 (last week 15) above the line and 751 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 Consumer Discretionaries Lead In Earnings Growth In Q3?

Ulli Market Review Contact

ManThe S&P 500, according to Estimize, is likely to see a negative earnings growth of 2-1/2 percent and revenues growth of negative 1.7 percent. In the last quarter, earnings growth expectations were 3.5 percent, but it ended up with about 1 percent. The peak-rate currently stands at about 66 percent for about 22 companies that have reported third-quarter results and companies do tend to beat expectations with going into the season.

But until now, all commodity-related stocks have slumped with energy EPS sliding 66 percent and materials losing about 5 percent. Globally, China is likely to remain a worry with the bursting of equity bubbles there and the effects are likely to be stronger than in the second quarter, she noted.

Asked which sectors are likely to perform well, Christine said consumer discretionary will be a winner since lower oil does benefit some sectors. Estimize expects the discretionary sector to record a 13.5 percent growth this quarter with a special focus on automobiles.

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New ETFs On The Block: Vanguard Tax-Exempt Bond Index Fund (VTEB)

Ulli Municipal ETFs Contact

InvestingGoing by recent trends, about 200 new exchange-traded funds are launched in an average year. Vanguard, the second largest US ETF issuer after Blackrock’s iShares, however, remains conspicuously absent at most times despite managing $3.3 trillion in global assets.

Not any more after the Penn-based asset manager decided to break its long hiatus of more than two years with the launch of its first municipal bond index fund. That may sound a little strange since its competitors like iShares and State Street Global Advisors launched their muni-bond portfolios way back in 2009 and now offers a suite of products with billions in assets.

The newly-launched Vanguard Tax-exempt Bond Index Fund (VTEB) tracks the S&P National AMT-Free Municipal Bond Index, and is the asset manager’s first passive, index-tracking product. Vanguard has a suite of more than 15 active muni funds and its tax-exempt bond fund portfolio has nearly $120 billion in assets.

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ETF/No Load Fund Tracker Newsletter For October 9, 2015

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/2015/10/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-10082015/

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Market Commentary

MARKETS FULL STEAM AHEAD TO ROUND OUT RALLY

Fri pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

The Dow extended its recent rally to six sessions as stocks keep heading higher following the release of minutes of the Fed’s meeting last month that lowered investor expectations for an interest rate hike this year. It was all about the Dow this week as the index posted its best weekly advance since a nearly 660-point, 3.8%-run in early February. The S&P 500 also posted its largest weekly gain of 2015.

U.S.-produced crude was also higher, at one point climbing above the key $50 a barrel level and settling at a close of $49.51 a barrel.

Economic data was fairly light this week, so investors were able to key in on two major releases that included the international trade figures and the Federal Reserve Open Market Committee’s (FOMC) September meeting minutes. While international trade figures came in as expected, the release of the FOMC meeting minutes struck the market as dovish, implying that the Fed will continue to wait to raise interest rates.

Next week we have a full menu of economic data, which includes small business optimism figures on Tuesday, retail sales on Wednesday, inflation data on Thursday and industrial production and sentiment figures on Friday.

As for big earnings reports coming up next week, we will hear from four of the major financials, with JP Morgan (JPM), Wells Fargo (WFC), Citigroup (C) and Bank of America (BAML). Analysts say these groups will probably set a much better picture of what the rest of the earnings season can look like. We will also hear from Netflix (NFLX).

Remember going into next week that analysts’ expectations for the Q3 earnings season are low, expecting profits of S&P 500 companies to contract about 4%. But the low bar can potentially be a bullish development, as it makes it easier for companies to top analysts’ ridiculous expectations.

It was a mixed day with 5 of our 10 ETFs in the Spotlight rallying and 5 of them declining. The leader turned out to be Healthcare (XLV) with +0.46% while on the losing side the Financials (IYF) ended down with -0.48%.

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