Disney Pulls Down The Dow

Ulli Market Commentary Contact

Wed pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

While most indexes managed to close above the unchanged line, the Dow ended up slipping thanks to a weak performance in energy and Disney.

The early rally was based on hope that odds of an interest rate increase by the Fed next month subsided a bit due to a soft reading on ADP’s payroll report of 185,000 newly created jobs in July vs. 229,000 in June.

Of course, as we’ve seen in the past, ADP being a front runner to Friday’s jobs report by the Labor Department does not mean there are any conclusions to be had in what Friday’s numbers will look like. In the past, we’ve seen higher and lower figures, so this is not indicative of what we can expect. Nevertheless, a weak report could mean that the Fed might not hike next month, or so the theory goes.

9 of our 10 ETFs in the Spotlight headed higher led by Healthcare (XLV) with +0.84%, as Consumer Discretionaries (XLY) bucked the trend and closed lower by -1.08%.

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Dow Falls For Fourth Straight Day

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Shares of Apple (AAPL) fell 3.2%, making it the biggest losing stock of the Dow. The tech giant is under pressure as worries about an economic slowdown in China raises concerns about its biggest growth market.

On the economic front, investors continue to focus (speculatively) on when the Fed will boost interest rates, however, there has been little indication regarding the matter from Fed thus far in August.

In the world of entertainment, we heard some good news from Disney today. Walt Disney Co.’s (DIS) fiscal third quarter income rose 11% from a year ago to $2.5 billion as its major business lines, particularly movie production and cable networks, generated higher revenues. Media Networks, the Burbank, Calif.-based company’s largest division that runs ABC, ESPN and Disney cable networks, reported a 5% increase in revenue to $5.8 billion.

And in tech, of course Apple (AAPL) was back in the news today. The much loved tech company’s shares fell to $114.64, firmly below their 200-day daily moving average. The stock was the biggest drag on the three major U.S. indexes. Why the continued drop? Slower production in China and skepticism over demand for iPhones as other competitors increase product availability in the market.

Regarding economic news, the ISM Non-manufacturing Index will be announced on Wednesday, and Friday brings the biggest report of the week with July employment.

8 of our 10 ETFs in the Spotlight slipped just a tad with the Select Dividend ETF (DVY) taking the biggest hit by losing -0.54%. Managing to stay unchanged was Consumer Staples (XLP) while Consumer Discretionaries (XLY) gained +0.43%.

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Oil Slump Pulls Indexes Down

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

I could have been a lot worse, but the major indexes found some footing late in the day and managed to limit the downside damage with the S&P making up more than half of its intra-day losses. But then again, after last week’s nice gains, a pause was in order.

Weak economic data, such as a poor July manufacturing survey along with very tepid growth for June construction spending, combined with less than expected personal spending (June), took the starch out of any upward momentum. The energy sector led decliners with a 2% loss on the session.

We still remain in the trading range for the S&P with a high of some 2,130 and a low of around 2,050 and, until a breakout occurs, we may be treading water.

Our 10 ETFs in the Spotlight were mixed again with 3 of them gaining and 7 of them losing. Leading the plus side was the S&P 500 Low Volatility ETF (SPLV) with +0.24%; on the minus side, the Mid-Cap Value (IWS) took the dubious honor with -0.45%.

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ETFs/Mutual Funds On The Cutline – Updated Through 07/31/2015

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 178 (last week 150) 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. 33 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 430 (last week 318) above the line and 390 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: Is The Current Recovery Driven By Leverage?

Ulli Market Review Contact

ManInvestors were focused on stocks outside the US last year and it’s very refreshing to see that balance to come back, said Richard Madigan, chief investment officer at JP Morgan Private Bank.

While investors can always look at Europe, Japan and some parts of Asia, they are over-thinking about growth in America. Growth in the US is slow and dynamic, and security valuations are high but not too bubbly. Most portfolio returns are going to be driven by equity market returns, he noted.

Asked if he preferred global equities to domestic stocks, Rich answered in affirmative. In the US, JP Morgan has been very focused on midcaps because the Merger & Acquisition-cycle has been incredibly constructive in that sector. About 92-93% of the M&A deals and transaction have been below half a billion dollars. The recent dollar strength plays into the deal cycle as well. Among the different sectors, investors can focus on that everyone’s talking about because of earnings; i.e. tech, health and consumer-discretionary, he observed.

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New ETFs On The Block: ALPS Sector Leaders ETF (SLDR)

Ulli Equity ETFs Contact

InvestingALPS Holdings, the Denver, Colorado based fund issuer better known for its customized investment products, recently launched a product that seeks to avoid weighting anomaly in different sectors due to security mis-pricings. The newly launched ALPS Sector Leaders ETF (SLDR) is an effort by the company to avoid loss of diversification benefits associated with under– or over-weighting particular sectors.

Market capitalization weighted indexes suffer from one major flaw; they inherently underweight undervalued stocks and overweight overvalued stocks. Additionally, they tend to tilt toward the biggest companies among the constituent stocks.

For example, Apple Inc should account for 1/500 of the S&P 500 Index’s total had the benchmark index been equally-weighted, compared with the roughly 4 percent that it contributes now.

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