Markets Mixed While Awaiting Earnings Season

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

After a strong five-day rally that lifted the major U.S. stock indexes well off their lows hit in August, equities ended mixed as Wall Street reassessed the outlook for stocks for the rest of 2015.

Healthcare stocks led the decline in the S&P, while a rally in Dupont’s stock (DD) helped keep the Dow in positive territory. Healthcare stocks have had a tough year that is mostly due to the widespread scrutiny over high prices for pharmaceuticals.

Investors are still anxious in waiting for the earnings season to kick off later this week. At present, expectations are low, but many analysts think that this could actually be beneficial for the indexes if stocks outperform. It is a critical time to see how the markets will react to earnings reports, especially since the S&P 500 keeps flirting with the 10% correction status.

And in economic news, we heard today that the U.S. trade deficit jumped sharply in August as exports fell to the lowest level in nearly three years while imports increased, led by a surge in shipments of cellphones from China. The deficit increased 15.6% to $48.3 billion, the biggest since March, the Commerce Department reported Tuesday.

Only 2 of our 10 ETFs in the Spotlight managed to eke out a gain with the Global 100 (IOO) taking the top spot by adding +0.42%. The loser of the day turned out to be Healthcare (XLV) which got clobbered at the tune of -2.35%. Ouch.

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Stocks Roar Back; American Apparel Business Model Fails

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Stocks kicked off the week in rally mode Monday as investors view a Federal Reserve interest rate hike this year as less likely after Friday’s weak jobs report raised questions about the pace of U.S. growth.

Third quarter earnings season kicks off this week when Alcoa (AA) reports on Thursday. Analysts are predicting a decline of 4.8% for S&P 500 companies, which would be the first quarter-over-quarter profit decline since 2009.

The culprit for market declines is largely pointing towards the energy sector. Companies in the energy sector are expected to post 60% lower profits for Q3, which is mainly due to a 50% drop in oil prices from this time last year. Don’t let these numbers fool you though, because energy companies skew the numbers. Excluding energy sector stocks, corporate profits are on track to be growing 3.5%, according to S&P capital IQ.

In other corporate news, we heard today that American Apparel (APP) has filed for bankruptcy, after its made-in-the-U.S. model faltered, its fashion sense slipped and its controversial former CEO became embroiled in scandal over his behavior in the workplace. The company, which flirted with bankruptcy as early as 2011, has about 8,500 employees at six factories and 230 stores in the U.S. and 17 and it famously bet its business model on clothing made in the U.S.

Continuing Friday’s theme, all of our 10 ETFs in the Spotlight rallied and closed higher with the leader being the MidCap Value (IWS), which added +2.14%. The laggard for the day was Healthcare (XLV) with +0.26%.

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ETFs/Mutual Funds On The Cutline – Updated Through 10/2/2015

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 18 (last week 10) 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. 4 ETFs (last week 3) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 15 (last week 17) above the line and 785 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 Upstream Oil And Gas Companies See A Wave Of Defaults In The Near Future?

Ulli Market Review Contact

ManThe US economy is doing about 2.5 percent real growth and 4.5 percent nominal growth with the labor market tightening pretty dramatically, said Mark Kiesel, Global Head of Corporate Bond Portfolio Management at PIMCO.

The decline in domestic inflation is transitory and PIMCO agrees with Fed Chair Janet Yellen that US inflation is headed towards the 2 percent target. In a 2 percent inflation world, 10-year Treasury yields should not be at 2 percent, he noted.

Asked why 10-year Treasury yields have been hovering around the 2 percent level, Mark said people are probably looking backwards without realizing what’s going to happen going forward. The US economy is 70 percent domestic consumption and with the labor market tightening fundamentals remain strong, he explained.

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New ETFs On The Block: Market Vectors Oil Refiners ETF (CRAK)

Ulli Oil ETFs Contact

OilMarket Vectors, the exchange-traded fund issuing arm of investment management firm Van Eck Global, recently launched a “first-of-its-kind” US-listed ETF that offers a pure play exposure in global refiners.

While its common knowledge that US oil and gas producers (in the “upstream”) are bleeding, the story is quite different for oil refiners (in the “downstream”). The refining sector could actually make a killing despite crude oil prices plunging more than 60% since last summer due to low feedstock and main input costs.

That should be music to the newly launched Market Vectors Oil Refiners ETF (CRAK) and investors looking to profit from the energy sector’s decline. Oil refiners earn their profits from the difference in crude input costs and the selling price of refined products. While input costs for most refiners are decided upon the light sweet Western Texas Intermediate (WTI) oil or the heavy sour Western Canadian Select (WCS) crude oil benchmarks, prices of gasoline in pumps and other refined products are typically priced based on Brent crude, which mostly trades at a premium over WTI (or WCS).

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ETF/No Load Fund Tracker Newsletter For October 2, 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-10012015/

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Market Commentary

STOCKS POST STRONG TURNAROUND TO CLOSE VOLATILE WEEK

Fri pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Stocks on Wall Street staged a powerful comeback after plunging early Friday as investors reacted to a weaker-than-expected September jobs report. The Dow was down as much as 258 points but did a complete turnaround closing up 200 points by the closing bell. Major indexes were higher on the week with the energy sector showing relative strength and the telecom sector showing relative weakness.

To close out the week, it appears that investors are shrugging off a downright miserable jobs report, instead focusing on the positives, such as the positive impact of a weakening dollar today on business and earnings of U.S. multinationals. Wall Street may also be reacting to what it perceives now as no chance of an interest rate hike from the Federal Reserve this year.

The marquee data release this week was the jobs report. The Bureau of Labor Statistics reported that the economy added 142,000 jobs in September—well below economists’ consensus estimate of 200,000. Additionally, employment gains for both the months of August and July were revised down by an aggregate of 59,000. While this data is disappointing, what’s worse is that about 20% of the gains came from government hiring.

Next week will be a relatively slow week for U.S. economic data, with the most important release being the Fed’s September meeting minutes on Thursday. We will also be watching the trade balance figures closely on Tuesday.

With today’s rebound, it’s no surprise that all of our 10 ETFs in the Spotlight rallied and closed up. Turning in the best scorecard for the day was Healthcare (XLV) with +2.08%. Lagging the bunch were the Financials (IYF) with a meager +0.13%.

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