Stocks Fall Hard For Third Straight Day

Ulli Market Commentary Contact

Wed pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

As the headline suggested, it was a tough day for all the major indexes. It was a third straight day of losses, and we saw the Dow drop a lofty 293 points by the close of trading. Are you hungry to know who the culprit was of the bearish trading session? None other than two food giants: Heinz (HNZ) and Kraft (KRFT).

The “MegaDeal”, as many are calling it, has investors all in a tussle it seems. The acquisition price, a mere $46 billion, will create the third largest Food and Beverage Company in North America. Not something to squint your eyes at by any means. Mr. Buffet has had a smile on his face thus far in 2015, given the fact that Berkshire Hathaway (BRK) owned 192,666 shares of Kraft at year end 2014, with a market value of $12.1 million. The stock price, as of today, puts BRK’s holdings at $16.2 million, which entails a 14% gain so far this year.

Moving on to commodities, the price of oil settled up 3% today as a weak dollar, fighting in Yemen and speculative buying boosted crude prices in spite of U.S. inventories building to record highs for an 11th week. In no help of the black gold price, the USD fell after disappointing U.S. durable goods orders for February came in. As we all know, a weaker dollar makes commodities denominated in the greenback cheaper for holders of other currencies typically boosting demand for such raw materials.

All of our 10 ETFs in the Spotlight followed the path down with the financials (IYF) taking the lead sporting a -1.88% loss, while Consumer Staples (XLP) resisted the sell-off very well by only surrendering -0.25%.

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Stocks End Lower After Digesting Economic Data

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Stocks drifted in and out of positive territory most of the morning, but turned downwards in afternoon trading as investors digested economic reports that showed an uptick in inflation and a big jump in new-home sales in February. Before the closing bell, the Labor Department reported that consumer prices were up 0.2%, the first increase in four months and in line with the rise expected by economists. Core prices, excluding food and energy, were up 0.2%.

In a second report, the government also said new-home sales climbed 7.8% to a seasonally adjusted annual rate of 539,000. The announcement came after an upward revision to January’s sales rate to 500,000 from a 481,000 annual rate.

Google (GOOG) jumped 2.2% Tuesday after saying it hired Ruth Porat, Morgan Stanley’s CFO, to replace Patrick Pichette as its the CFO in May. In entertainment, Netflix (NFLX) rose 3.1%, which is the largest gain since Feb. 3.

And in auto news, Ford Motors (F) is on track to move into the fourth place among foreign automakers in factory capacity in the country. Ford recently opened a new plant in Hangzhou that will increase the company’s manufacturing capacity to approximately 1.2 million vehicles a year.

All of our 10 ETFs in the Spotlight headed south lead by DVY and XLV with -0.87%, while IOO held up best by only surrendering -0.38%.

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Going Nowhere

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

The indexes meandered throughout the trading day but were not able to sustain early upside momentum. In the last few minutes of trading, the indexes puked and finished in the red, although by only a small margin given last week’s advance.

Concern remained in the currency arena where the dollars advance has raised serious concerns about future profitability of those companies with international exposure. Even though there was some dollar pullback today, stocks did not get any support out of it.

A host of economic data is on the menu for this week, but most closely watched will be the release of the GDPs’ fourth quarter revisions coming up this Friday.

7 of our 10 ETFs in the Spotlight slipped while 3 advanced. Heading the gainers was Global 100 (IOO) with +0.38%, while the downside was lead by Financials, which gave up -0.43%.

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ETFs/Mutual Funds On The Cutline – Updated Through 03/20/2015

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 292 (last week 237) 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. 48 ETFs (last week 37) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 520 (last week 352) above the line and 300 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: Will Weak Oil Prices Keep Inflation Expectations Subdued?

Ulli Market Review Contact

92835431The US Federal Reserve’s latest policy statement may have omitted the “patient” word, but there seems to be less certainty in the central bank’s overall tone, indicating the Fed wants to be less predictable about a June rate-hike given the multitude of data that is affecting the US economy, said Matthew Beesley, head of global equities at Henderson Global Investors.

Fed chair Janet Yellen is very keen to ensure there’s no supposedly “Yellen Put” factored in by the markets and there’s no free-ride for investors in the US. Since the US equity markets are at record high, there’s clearly this fear about the price levels of asset classes when interest rates start to rise eventually.

The Fed is trying to send the message that it would move responsibly when things start to change; it wouldn’t be just a dogmatic move when rates rise simply because that’s how they used to be in the past.

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New ETFs On The Block: SPDR S&P 500 Buyback ETF (SPYB)

Ulli Equity ETFs Contact

98153895The US economy is facing a strange situation; while corporate profits reached record highs, economic activity still remains subdued along with considerable slack in capacity utilization.

In the absence of capex opportunities, many companies are undertaking share buybacks to trim balance-sheets and boost EPS/returns. Also, buybacks are more tax efficient for investors than a special dividend.

Data by FactSet shows buybacks by S&P 500 companies rose to $143.4 billion in the third quarter of 2014, the fourth highest since 2005. Further, about 374 companies of the benchmark index repurchased some of their own shares between July and September last year, the report showed.

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