Indexes Close Mixed As Energy Stocks Rally On Higher Oil Prices

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

The major indexes closed mixed as energy stocks rallied on higher oil prices, which tech stocks lagged. The Dow moved back above 18,000, but there was no real momentum of note in trading today.

Wells Fargo (WFC) reported that first-quarter earnings fell to $5.8 billion, or $1.04 per share. The results beat analysts’ estimates of 98 cents per share, but the stock still fell 0.7%. Dow component Johnson & Johnson’s (JNJ) reported that quarterly profits fell 8.6%, mostly due to unfavorable exchange rates, a major divestiture and competition to its new hepatitis C drug. Shares didn’t take much of a hit though, only dipping 0.03%.

As for more upbeat news, retail sales rose in March, which marks the first monthly increase since November. Analysts cited stronger auto sales as the main force driving retail sales higher. Also, we heard today that American consumers’ increased spending boosted retail sales by a seasonally adjusted 0.9% in February.

In M&A news, there was a rumor today that Finnish phone-maker Nokia (NOK) is in talks to buy Alcatel-Lucent (ALU). If the acquisition goes through, it would undoubtedly create a new global telecom giant. So, keep your eyes peeled for more news about the deal.

9 of our 10 ETFs in the Spotlight recovered with the indexes and closed up; the leader was DVY with a gain of +0.57%. On the downside, XLY slipped a scant -0.05%.

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Stocks Fall As Earnings Season Gets Underway

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Equities fell as investors look ahead to a busy week of earnings and economic data. The stock market is coming off its second straight week of gains, and its next move will be determined largely by what corporate CEOs say about the earnings outlook for the rest of 2015.

Remember that a sluggish winter, dropping oil prices and a rising dollar have taken their toll on the economy and earnings in the quarter of 2015. Wall Street is expecting the S&P 500 to post its first contraction in quarterly earnings in almost six years when first-quarter profit reports are all tallied up.

We heard great news from the credit ratings industry today. Fitch Ratings – one of the largest providers of credit ratings for debt – affirmed the AAA rating for the USA Monday. The rating is extremely important with bond investors, who aren’t just concerned about a creditor’s current financial situation, but more importantly, how it looks in the future.

We will see a notable amount of earnings this week. In banking, Wells Fargo (WFC) and JPMorgan Chase (JPM) will start things off on Tuesday. A few techs have reported March-quarter results, but the season really kicks off with Intel (INTC) after the market close Tuesday. The No. 1 chipmaker is expected to post EPS of 41 cents, up 8% and revenue is expected to inch up 1% to $12.9 billion.

And in international news, we saw data today that showed trade in China shrank more than expected in March, with imports down 12.7% from a year earlier and exports falling 15%. The numbers fueled concern that economic data due out Wednesday will show overall growth fell further in the first three months of 2015 after declining to 7.3% in the final quarter of last year.

Only 1 of our 10 ETFs in the Spotlight, namely IYF, managed to buck the trend by adding +0.23%; all others ended up in the red with DVY showing the most weakness with a -0.66% loss.

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ETFs/Mutual Funds On The Cutline – Updated Through 04/10/2015

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 311 (last week 288) 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. 54 ETFs (last week 47) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 544 (last week 448) above the line and 276 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 US Fed Is More Worried About The International Economy?

Ulli Market Review Contact

92835431The latest Fed minutes show the central bank is in no hurry to raise rates, and the US central bank is likely to wait until 2016 before making any move, said Lindsey Piegza, chief economist at Sterne Agee.

Right now the Fed’s focus is the international economy, which reflected in their January statement for the first time. The rapid rise of dollar that is causing erosion of US exports and sending business and revenues overseas prompted the Fed to downgrade expectations for growth, inflation and the pathway to rates.

Any further rise to the dollar, which the Fed expects to happen in future, will only erode activity in the domestic economy and push out that rate forecast until the end of 2015 at the earliest, although Sterne Agee’s forecast for a probable rate hike remains 2016, she noted.

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New ETFs On The Block: SIT Rising Rate ETF (RISE)

Ulli Bond ETFs Contact

104004054Since fixed-income instruments lose value when interest rates rise, owners of bond exchange-traded fund portfolios have reasons to get worried amid an improving economy and a steadily declining unemployment rate.

Although the Fed seems to be taking a patient approach, many investors are looking for products to hedge their bond portfolios amid the growing chatter of a Fed Funds Rate (FFR) hike before the end of 2015.

The US central bank last raised rates in 2006 and has held the target policy rate (FFR) near zero since the financial crisis hit the economy in late 2008. While there’s no consensus on when the Fed will act, ETF issuers are rushing to meet the rising demand for products that are exclusively designed to offer protection against rising rates.

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04-10-2015

Ulli Newsletter Archives Contact

ETF/No Load Fund Tracker Newsletter For April 10, 2015

ETF/No Load Fund Tracker StatSheet

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

https://theetfbully.com/2015/04/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-04092015/

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Market Commentary

Friday, April 10, 2015

STOCKS END THE WEEK ON A SOLID NOTE; BLACKSTONE DEAL GOES THROUGH

Fri pic

[Chart courtesy of MarketWatch.com]
  1. Moving the Markets

Stocks rose for a third straight day Friday as the Dow rallied nearly 100 points and jumped back above the 18,000 level to close out with a weekly gain. The entire buzz today was about the General Electric deal.

As you may remember from earlier this week, there was speculation that Blackstone Group (BX) and Wells Fargo (WFC) were going to make an offer on a substantial real estate portfolio of General Electric (GE). Well, today General Electric announced it is selling the bulk of its GE Capital Banking business in its latest attempt to “simplify” its manufacturing business and concentrate on the best-performing segments.

The $23 billion deal, covering both GE Capital Banking and Real Estate, marks the largest real estate transaction since the 2007 recession. Separately, Blackstone Property Partners agreed to a $2 billion, all-cash acquisition of Excel Trust (EXL), a San Diego-based real estate investment trust that primarily targets shopping centers and grocery store-anchored investments.

In corporate earnings, the outlook for 2015 remains bleak, as Q1 earnings for the S&P 500 index are still expected to come in 4.7% lower and forecast Q2 earnings are expected to be 2.1% lower, according to Bloomberg.

For the week, we saw few major economic reports. The most impactful update was the March unemployment report, which was actually released on last Friday. U.S. economic data has seemed to weaken in recent months; however, economists expect the slowdown to allegedly prove temporary, as economic growth is expected to come in between 2.5% to 3% for the year, a stronger pace than most developed economies around the world.

All of our 10 ETFs in the Spotlight gained with healthcare (XLV) taking the lead today with +0.86%, while the financials (IYF) ended unchanged. 2 of the 10 made new highs for the year as you can see section 2.

  1. 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:

MaxDD

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:

YTD

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.

  1. Trend Tracking Indexes (TTIs)

Our Trend Tracking Indexes (TTIs) advanced and ended up deeper on the bullish side of their respective trend lines:

Domestic TTI: +3.31% (last Friday +2.74%)—Buy signal effective 10/22/2014

International TTI: +4.95% (last Friday +3.83%)—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 Chris:

Q: Ulli: Do you ever decide to “take profits” on one of your 10 ETFs in apparent bubble conditions or instead wait and let the TTI’s help decide what to do?

For example, the biotech sector has been skyrocketing the past couple of years e.g. IBB ETF. The healthcare XLV ETF is considered a somewhat low beta ETF, but with that said, does have a decent % of biotech companies in its portfolio holdings.

I’m not sure on the exact %, but a few websites average to somewhere around 15-20% allocated to biotech companies in the XLV, which might provide a lot of volatility for this ETF if something were to disrupt the biotech industry e.g. Obamacare repeal, new gov. regulations etc.

A: Chris: I don’t like to make wild guesses about the direction of any ETFs I own; I like to use clearly defined price points to make my decisions for me. Most of the time, a trailing sell stop will be triggered before a trend line crossing occurs. When some ETFs rally strongly, such as biotechs and others, their respective trailing sell stops serve 2 purposes:

  1. To limit downside risk should a sell off occur shortly after a purchase has been made, and
  1. To lock in profits once an ETF has shot into the stratosphere and is bound to correct more quickly than others

It does not matter what the reasons for a sell-off are, I simply prefer having the sell stops be my guide as to whether to exit or not, rather than me trying to make an educated guess. Remember, one of the reasons we engage in Trend Tracking is to take the emotions out of the equation and become less attached to the decision making process.

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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/