Equities Rebound From Early Drop

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

The major indexes overcame an early drop, with the S&P 500 visiting the 2,079 level, at which point the bulls took over and managed to push the index back above the 2,100 mark.

Homebuilders were the leaders, although volume was extremely light with anxiety being present about the intentions of the Fed as to their stance on interest rates. We continue to be stuck in a tight trading range and need some sort of driver to provide new upside momentum.

Concerns about China have eased somewhat so the focus has been on the economy and what the Fed might or might not do. If they decide to become more transparent in their intentions, we most likely will see an immediate market reaction. Should the Fed indicate that a rate hike for September is unlikely, whatever obscure language they might use to come to that conclusion, we could see the top of the trading range (around 2,130 for the S&P 500) being taken out with the next target being the 2,050 level.

All of our 10 ETFs in the Spotlight managed to close up with Healthcare (XLV) taking the lead by gaining +1.01%. Lagging today was Consumer Staples (XLP), which eked out a meager +0.10%.

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ETFs/Mutual Funds On The Cutline – Updated Through 08/14/2015

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 152 (last week 143) 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. 24 ETFs (last week 24) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 367 (last week 314) above the line and 453 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 Opionion: Will The Fed Delay The Rate Hike To Avoid Importing Deflation From China?

Ulli Market Review Contact

ManThe recent devaluation of the Chinese Yuan is a reason for worry because it’s a huge event, said Joachim Fels, global economic advisor at PIMCO. Two major economies, the US and China were willing to let their currencies appreciate, which allowed the rest of the world to export their deflation. Since China just decided to jump ship, Beijing’s own deflationary pressure will now start to weigh on the rest of the world, which is a reason for worry, he noted.

Asked how far the People’s Bank of China will let the Yuan fly, Joe said till now the PBOC has allowed the currency to depreciate 4.5 percent, but the buck doesn’t stop there. The PBOC is likely to allow about 10 percent depreciation for the Yuan, he observed.

Asked if 10 percent depreciation is realistic, despite the PBOC publicly dismissing such steep cut as overblown, Joe answered in affirmative. Markets are pushing the Chinese currency lower although the PBOC, for obvious reasons, doesn’t want to be seen to be encouraging that move. They are trying to stem against it and making efforts to make it smoother. However, China would require a weaker currency eventually, because its exports and the overall economy have been sagging, which explain the latest currency slide, he argued.

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New ETFs On The Block: ALPS Enhanced Put Write Strategy ETF (PUTX)

Ulli Covered Call Strategy, Income ETFs Contact

InvestingInvestment managers often resort to derivatives trading to enhance portfolio yields. A frequently used income generation strategy involves selling call or put strategies when the investment manager is reasonably sure about the market’s direction after analyzing the macros.

However, if the timing is wrong, the premium collected from put options could prove insufficient to offset the losses suffered due to downward movement in the underlying index/asset-price.

A more refined approach for downside protection while preserving upside potential could be selling cash collateralized put options on the S&P 500. This is exactly what Kevin Rich seeks to achieve with the recent launch of the ALPS Enhanced Put Write Strategy ETF (PUTX).

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ETF/No Load Fund Tracker Newsletter For August 14, 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/2015/08/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-08132015/

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Market Commentary

INDEXES CLOSE UP FOR THE WEEK

Fri pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

U.S. equities closed higher today to round out a week filled with volatility. The major indexes hit session highs less than an hour ahead of the closing bell as news about the euro zone confirmed it agreed to launch a new bailout program for Greece. The S&P 500 managed to eke out a decent gain for the past 5 sessions.

The big news this week was, of course, the shock waves caused by China devaluing its currency. The government announced that they devalued the country’s currency (the yuan or renminbi) by over 3% against the USD, taking global markets by surprise. Trying to stimulate the slowing Chinese economy has been at the forefront of the government’s focus of late. Hope runs high that the currency move will increase demand for Chinese goods abroad, however, the devalued currency will make imports to the country more expensive and hurt U.S. companies’ business.

In economic news, data showed factory production beat economists’ expectations, and that wholesale prices increased at a greater-than-expected rate. Traders were also digesting other incoming economic data, including a bigger-than-expected jump in inflation at the producer level in July, which again has Wall Street worried about an interest rate hike from the Federal Reserve as early as next month. July industrial production data came in stronger than expected, as well, rising 0.6%

All of our 10 ETFs in the Spotlight were able to close higher today as the markets found new upward momentum. Leading the pack was the Mid-Cap Value (IWS) with +0.55%; the laggard was Consumer Discretionaries (XLY) with +0.06%.

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Weekly StatSheet For The ETF/No Load Fund Tracker Newsletter – Updated Through 08/13/2015

Ulli ETF StatSheet Contact

ETF/Mutual Fund Data updated through Thursday, August 13, 2015

TOC021915

If you are not familiar with some of the terminology used, please see the Glossary of Terms.

 

1. DOMESTIC EQUITY MUTUAL FUNDS/ETFs: BUY — since 10/22/2014

TTI

Our main directional indicator, the Domestic Trend Tracking Index (TTI), broke through its long-term trend line generating a “Sell” for this arena effective 10/14/2014, which was followed by a violent break back above the line on 10/22/14 generating a new “Buy.” It was a classic whipsaw signal, and you can read more on my blog as to the events as they were unfolding.

As of today, our TTI (green line in above chart) is positioned above its long term trend line (red) by +0.54% keeping us in the market with our established positions.

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