Equities Finally Hold Ground On Healthcare Stocks And Consumer Confidence

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Stocks ended in mixed territory after choppy trading as Wall Street staged a partial rebound from Monday’s sharp sell-off that edged the U.S. market closer to its 2015 lows hit in late August. The S&P 500 and Dow both stayed in positive territory, while the Nasdaq slipped further into the red.

Markets were steadied today by a rebound in healthcare stocks. Pharmaceutical companies Biogen (BIIB) and Vertex (VRTX) notched the largest gainers on the day. Drug manufacturer stocks have been weak recently due to concerns that new legislation will introduce price controls throughout the industry.

We also heard some favorable news on the economy today from a report that showed consumers grew more confident in September despite increased market volatility. The September reading on consumer confidence rose to 103, which is the highest since January.

Finally, 8 of our 10 ETFs in the Spotlight showed some green numbers for a change with the leader of the day being yesterday’s big loser, namely Healthcare (XLV), with +0.92%. On the downside, Consumer Discretionaries (XLY) was the weakest with -0.33%.

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Bearish Momentum Accelerates

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Stocks tumbled, for the 5th day in a row, to kick off the new week in the red, as Wall Street reacted to fresh data showing China’s economy is in slowdown mode, overshadowing a big deal in the hard-hit energy patch. Blue chips comprising the Dow temporarily ducked below 16,000 at one point, the first time the index has fallen below that mark since Aug. 25.

The latest hit to investor sentiment was a continued drop in Chinese Industrial profits, which fell 8.8% in August vs. the same period a year ago. This is just the latest data point out of the world’s second-biggest economy that suggests economic softening. Also adding to the market’s angst is a 20% plunge in shares of global commodity giant Glencore.

U.S. investors got some good news on the economic data front today, with August consumer spending rising 0.4% and personal income up 0.3%.

The discussion about whether an official bear market is coming has picked up in the financial press, but in this corner we’ve identified it as of 8/21/15 and 8/24/15 respectively, at which time we went to 100% cash. So far, it’s been the right move, and odds are high that things could get a lot worse. Of course, dead cat bounces are always part of hovering on the bearish side of the trend line, so I’d expect to seem some along the way.

As far as resistance levels for the S&P 500 is concerned, 1,862 is the one to watch. If that one does not hold, very likely we’ll be slipping towards the 1,820s.

None of our 10 ETFs in the Spotlight showed any resistance to the continued sell-off with our favorite holding of the past 2 years now turning into a big loser, namely Healthcare (XLV), which got spanked at the tune of -3.87%; just for the day. It simply goes to show you the value of a sell-stop discipline, as all high fliers will eventually correct and usually at a faster rate than they went up.

Holding up the best in today’s slide were Consumer Staples (XLP), which only gave back -1.50%.

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ETFs/Mutual Funds On The Cutline – Updated Through 09/25/2015

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 10 (last week 28) 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. 3 ETFs (last week 6) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 17 (last week 36) above the line and 783 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 Higher Home Prices Drive US Inflation?

Ulli Market Review Contact

ManMarket observers would not expect the Federal Reserve to raise rates in October or December this year because historically the US central bank has been sensitive to international concerns, said Bill Smead, CEO and CIO of Smead Capital Management.

Many times in the past the Fed has been sensitive to what has been going in Asia or Latin America, and thanks to the recent developments in Brazil and China, caution prevails.

While Fed Chair did mention China in the FOMC meeting, she didn’t mention China even once during her speech Thursday. Asked to comment, Bill said the Fed probably inferred if they’d raise interest rates in the middle of market turbulence the dollar may become extremely strong and set the ground for some more commotion, which would trigger another race to the bottom in the world of currency participants.

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New ETFs On The Block: Compass EMP International 500 Volatility Weighted Index ETF (CIL)

Ulli International ETFs Contact

91551519Compass Efficient Model Portfolios (Compass EMP), which was recently acquired by Victory Capital, launched two volatility-weighted funds that widened the firm’s lineup of so called smart-beta products and brought its total number of offering to ten.

The Compass EMP International 500 Volatility Weighted Index ETF (CIL) and the Compass EMP International High Dividend 100 Volatility Weighted Index ETF (CID) seeks to provide investors more stable exposure to global stocks through smart-beta investing.

The new funds CIL and CID track the Compass EMP International 500 Volatility Weighted Index and the Compass EMP International High Dividend 100 Volatility Weighted Index, respectively, and are designed to outperform traditional indexes by combining fundamentals with broad market volatility weighting screens of individual securities.

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ETF/No Load Fund Tracker Newsletter For September 25, 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/2015/09/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-09242015/

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Market Commentary

UNCERTAINTY REMAINS

Fri pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Stocks ended the week on a mixed note despite a big early rally Friday after Federal Reserve Chair Janet Yellen’s comments about a potential rate hike.

Yellen gave stocks a broad boost early today after she suggested in a speech yesterday that global economic weakness won’t be significant enough to alter the central bank’s plan to raise its key short-term rate by December.

Uncertainty over the Fed’s timetable for raising rates has been weighing on the market as investors seek clarity on monetary policy was offset later in the day by plunging biotech stocks, which dragged the Nasdaq into negative territory for the day and further into the red for 2015.

Looking forward, Friday’s jobs report will be the marquee economic event. Perceived strength in the report could give the FOMC what it needs to raise short-term interest rates by the end of 2015. Other important economic numbers to watch include construction spending on Thursday and factory orders on Friday.

For the day, 4 of our 10 ETFs in the Spotlight ended up on the plus side as Consumer Staples (XLP) took the lead by gaining +0.66%. Losing big time was Healthcare (XLV), which got slaughtered and lost -2.75%.

Bearish momentum remains alive and well.

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