Equities Edge Higher On Positive Retail Sales

Ulli Market Commentary Contact

Thur pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

The S&P shot out of the gates early on and, while the index was not able to hang on to the gains, it managed to eke out 4 points for the day. All major indexes closed on the plus side.

Providing momentum were improved retails sales (+1.2% in May), which supports the theme that the economy is actually strengthening which, all of a sudden, appears to be a positive for the stock market.

The early momentum faded as the “Greek story” reversed with the IMF pulling out of debt negotiations for the time being. We meandered the rest of the day but ended up above the unchanged line.

9 of our 10 ETFs in the Spotlight followed suit in this mainly sideways trending session. Healthcare (XLV) was leader with +0.68%, while Consumer Staples (XLP) slipped a scant -0.04%.

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Greece Plans Looking Up; Oil Continues To Rise

Ulli Market Commentary Contact

Wed pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Stocks surged and bond yields hit nearly nine-month highs today as good news on Greek debt talks and U.S. wage growth encouraged investors to take some risk and invest. The mere hint of a thaw in the deadlock between Greece and its eurozone creditors is being viewed as a major positive by Wall Street and stocks reacted cooperatively.

In insurance news, we heard today that insurer Tokio Marine Holdings Inc. is going to be bought by HCC Insurance Holdings for $7.5B. The deal underscores how Japanese firms are focused on foreign markets in search of growth. Japan firms have now announced a year-to-date record of $50.1 billion of overseas acquisitions so far in 2015, up from $30.1 billion in the same period last year. The total for all of 2014 was $53.4 billion.

In tech news, Apple (AAPL) shares were on investors’ radar today. The tech powerhouse is reportedly facing antitrust scrutiny from regulators. Attorneys General of New York and Connecticut are probing whether major music industry firms colluded to restrain competition among streaming music services. This investigation comes as Apple launches its $10 a month music streaming service. Regardless, shares gained 1.15% on the day.

And if you are an oil bull, the news was all good today as crude rose above $60 a barrel, which is up considerably since the winter months earlier this year.

All of our 10 ETFs in the Spotlight joined the newly found upward momentum and rocketed higher. Leading the charge was the Global 100 ETF (IOO) with +1.70%, while the “laggard” was Consumer Staples (XLP) with only +0.98%.

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Inching Above The Unchanged Line

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

U.S. stocks were little changed today, with only the S&P managing to close in the green, as investors are processing economic data and awaiting further developments in Greece’s debt negotiations with creditors. In economic news, U.S. wholesale inventories were higher than expected in April, while a separate report showed small businesses confidence increased in May.

In corporate news, airline shares fell for a sixth day on concerns about slowing growth and rising capacity, while HSBC shares traded slightly lower after the bank announced cost-cutting efforts that included 50,000 job cuts globally. U.S. Treasuries were lower today.

General Electric said today that it has agreed to sell its private equity financing unit to Canada Pension Plan Investment Board (Canada’s largest pension fund) in a deal valued at about $12 billion USD. GE Capital Sponsor Finance, GE’s private equity unit, has assets of more than $10 billion and offers financing for companies conducting leveraged transactions, growth funding and recapitalization. The unit includes GE Antares, a lender for midsize companies.

Our 10 ETFs in the Spotlight ended up mixed with 4 of them closing up, while 6 of them slipped. Leading the gainers was Consumer Staples (XLP) with +0.48%, while the downside was led by the Global 100 (IOO) with -0.30%.

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Three Down Days In A Row

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Last week’s slide continued as the major indexes headed south again, and even the last hour’s rebound attempt had no staying power, so we closed at the day’s lows.

We’re stuck in a slump with the Dow now having dipped into negative territory year-to-date, while the S&P 500 has come off its May 21st high by more than 2%. I think we’re seeing the fallout from last week’s positive jobs report, which has brought a rate increase by the Fed back into the picture. Based on this reaction, it seems that Wall Street would rather have lower rates than a stronger economy.

A new driver is needed to push the indexes out of the doldrums. On the horizon lurks Thursday’s retail sales report, which could confirm a more solid economy should it exceed expectations. If it turns out weaker than expected, we may very well see a rebound rally.

With today’s broad retreat, it was no surprise that all of our 10 ETFs in the Spotlight headed down that slippery slope and closed lower. Giving back the most was Consumer Consumer Discretionaries (XLY) with -0.71%, while Consumer Staples (XLP) held up best with a minor loss of 0.04%.

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ETFs/Mutual Funds On The Cutline – Updated Through 06/05/2015

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 410 ETFs, of which currently 247 (last week 286) 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. 41 ETFs (last week 49) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 513 (last week 539) above the line and 307 below it out of the 820 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: Does The US Labor Market Data Indicate Stronger GDP Growth?

Ulli Market Review Contact

ManThe latest nonfarm payrolls data showed the US economy added 280,000 jobs in May, which reassures investors that the jobs trend is clearly above 200,000 gains per month, said Jan Hatzius, chief economist at Goldman Sachs.

There was some doubt after March’s very weak employment report – the economy added only 85,000 jobs for the month, before the upward revision came in Friday. Also, April’s reading of 223,000 raised the question whether the jobs growth trend weakened to less than 200,000. But with May’s number, investors’ can lay that concern to rest as the trend is clearly above 200,000, he noted.

While the jobs report show solid improvement, consumer spending data has continued to disappoint. Asked to explain this disconnect, Jan said labor market data and generally the survey data has also been better than retails sales, and ultimately GDP data because retail sales is the most important input and contributes nearly 70 percent to US GDP. The GDP data has been weaker than the general message conveyed by the other parts of economic-data universe. It would prudent to put more weight on labor market numbers and the surveys because there are likely to be less measurement errors in those than GDP numbers, he explained.

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