Ulli... The ETF Bully

Markets Can’t Keep The Momentum Going

Ulli Monday, 11 May 2015, 3:51 PM Market Commentary Contact

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Stocks fell as Wall Street failed to extend Friday’s strong jobs-fueled rally, and a drop in oil prices helped push energy stocks sharply lower. U.S. benchmark crude fell 26 cents to $59.13 a barrel and shares of ExxonMobil (XOM) dropped 1.7% and Chevron (CVX) fell 1.2% accordingly.

In M&A news, today we saw shares of Rosetta Resources (ROSE) surge 27.2% after Noble Energy (NBL) said it was buying the oil and gas exploration company for about $2.1 billion in stock. Noble’s stock fell 6.2% though.

In scandalous news, Citigroup (C) confirmed Monday that it could plead guilty to an antitrust charge as part of a settlement with the Department of Justice over evidence that traders of the U.S.-based global bank manipulated foreign-exchange currency rates. The stock dropped ever so slightly today by 0.09%.

And in international news, China was back in focus today. The country’s administration cut interest rates again on Sunday, which marks the third time in six months. Investors are worried that the interest rate cut may not be enough to stimulate an economy that is headed for its worst year in a quarter of a century.

9 of our 10 ETFs in the Spotlight slipped as the market lost Friday’s upward momentum. Leading to the downside was SPLV, which gave back 0.72%. The lonely winner was healthcare (XLV) with a small 0.05% gain.

ETFs/Mutual Funds On The Cutline – Updated Through 05/08/2015

Ulli Monday, 11 May 2015, 5:47 AM 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 310 (last week 308) 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. 55 ETFs (last week 56) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 541 (last week 506) above the line and 279 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: Has Wage Inflation Stalled Because Of Weak Productivity Growth?

Ulli Sunday, 10 May 2015, 6:16 AM Market Review Contact

The latest nonfarm payrolls report indicate the economy rebounded in the second quarter, although productivity growth seems to have stagnated for some time now, said Ed Lazear, professor of economics at Stanford University.

Creating more jobs without adding to productivity means more people are carving up pieces from the same GDP pie. One of the good things that happened during the recession was that productivity had continued to grow despite a shrinking economy. Unfortunately, the economy failed to sustain that growth rate when recovery took hold, which could largely be attributed to weak investment, particularly weak capital expenditure by both the public and the private sector.

So, the factors of production are not growing in a way they should be growing in order to have high productivity growth. There are some policy explanations for the weak investment cycle, but the bottom line is that because productivity growth stalled in the labor market, there has been no wage growth. The job growth being witnessed is a good thing, but it’s not symptomatic of the state of the labor market; it overstates the strength of the labor market, he observed.

New ETFs On The Block: iShares Short Maturity Municipal Bond ETF (MEAR)

Ulli Saturday, 9 May 2015, 5:48 AM Municipal ETFs Contact

As the US recovery starts to gain momentum amid an improving labor market, the buzz of a possible lift-off for the Federal Funds Rate (FFR) by the second-half of this year is getting louder.

Needless to say, the short end of the yield curve is drawing top dollars as worried fixed income investors are rushing in to protect their capital before the Fed makes its move. Also, the tax-free status of muni bonds makes them doubly more attractive, particularly for individuals that belong to the high tax bracket.

To take advantage of renewed investor interest in the fixed income space, iShares, the world’s largest issuer of exchange traded funds, recently launched its first actively-managed munis ETF. The newly rolled out iShares Short Maturity Municipal Bond ETF (MEAR) targets investment-grade municipal debt with maturities less than five years.

05-08-2015

Ulli Friday, 8 May 2015, 3:31 PM Newsletter Archives Contact

ETF/No Load Fund Tracker Newsletter For May 8, 2015

ETF/No Load Fund Tracker StatSheet

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THE LINK TO OUR CURRENT ETF/MUTUAL FUND STATSHEET IS:

https://theetfbully.com/2015/05/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-05072015/

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Market Commentary

STOCKS REALIZE SOLID END TO A BUSY WEEK

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Stocks staged a strong rally Friday as the government reported that job gains rebounded in April. This allowed investors to breathe a sigh of relief, as they were hoping that March’s disappointing jobs report was temporary. The report showed that the economy added 223,000 jobs in April, which was significantly higher than job gains in March. All 30 stocks in the Dow index rose, and all 10 of the S&P sectors gained, with materials and energy leading the way.

For the week, all major indexes were higher, while performance across sectors was mixed. Financials were the strongest upward movers this week, while telecom and energy both moved lower. We received mostly upbeat earnings reports across the board as earnings season is coming to a close.

In international news, a big gain in U.K. stocks today pushed European shares to their biggest gain of 2015 after a surprise election victory for the Conservatives kept David Cameron as Britain’s prime minister. The Stoxx Europe 600 Index rose about 2.9%.

As far as other economic data goes, retail sales will be announced next Wednesday and the Producer Price Index is expected Thursday.

All of our 10 ETFs in the Spotlight joined upward momentum and closed higher. The leader was the Global 100 (IOO) with a gain of 1.83%, which was closely followed by Healthcare (XLV) at +1.62%. Lagging the bunch was DVY, which added 0.97%.

2. ETFs in the Spotlight

In case you missed the announcement and description of this section, you can read it here again.

It features 10 broadly diversified ETFs from my HighVolume list as posted every Monday. Furthermore, they are screened for the lowest MaxDD% number meaning they have been showing better resistance to temporary sell offs than all others over the past year.

Here are the 10 candidates:

The above table simply demonstrates the magnitude with which some of the ETFs are fluctuating in regards to their positions above or below their respective individual trend lines (%M/A). A break below, represented by a negative number, shows weakness, while a break above, represented by a positive percentage, shows strength.

For hundreds of ETF/Mutual fund choices, be sure to reference Thursday’s StatSheet.

Year to date, here’s how the above candidates have fared so far:

Again, the first table above shows the position of the various ETFs in relation to their respective long term trend lines (%M/A), while the second one tracks their trailing sell stops in the “Off High” column. The “Action” column will signal a “Sell” once the -7.5% point has been taken out in the “Off High” column.

3. Trend Tracking Indexes (TTIs)

Our Trend Tracking Indexes (TTIs) recovered and moved deeper into bullish territory.

Here’s how we closed the week:

Domestic TTI: +2.54% (last Friday +2.49%)—Buy signal effective 10/22/2014

International TTI: +5.07% (last Friday +4.64%)—Buy signal effective 2/13/2015

Have a nice weekend.

Ulli…

Disclosure: I am obliged to inform you that I, as well as advisory clients of mine, own some of these listed ETFs. Furthermore, they do not represent a specific investment recommendation for you, they merely show which ETFs from the universe I track are falling within the guidelines specified.

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READER Q & A FOR THE WEEK

All Reader Q & A’s are listed at our web site!
Check it out at:

http://www.successful-investment.com/q&a.php

Reader Chuck:

Q: Ulli: Is VEU a good proxy for your international indicator, or do you prefer IOO?

A: Chuck: Neither functions as a proxy; however, as an investment, I prefer IOO, which is why it is a member of the daily featured ETFs in the Spotlight. While performance is similar, IOO sports less volatility and therefore allows us to ride out some market fluctuations without getting stopped out too much.

Here’s a 1-year chart comparison:

As you can see, VEU (red) clearly shows more downside momentum during corrective moves in the market, while IOO (blue) seems to hold up better. That’s why I prefer it.

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Do you have the time to follow our investment plans yourself? If you are a busy professional who would like to have his portfolio managed using our methodology, please contact me directly or get more details at:

https://theetfbully.com/personal-investment-management/

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Back issues of the ETF/No Load Fund Tracker are available on the web at:

https://theetfbully.com/newsletter-archives/