Markets Continue Slipping On Oil Prices

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Markets continued their shaky start to 2015 today, as all major indexes finished in negative territory. The Dow has now lost more than 500 points in the last two trading sessions and the S&P 500 is down 2.73% over the first 3 trading sessions of the year.

The culprit behind the markets continued slide appears to still be falling oil prices and woes over the state of the European economy. We also heard some negative sentiment from Bill Gross today (former PIMCO bond giant), who said that “good times are over” and that many asset classes will finish the year with losses.

In regards to Europe, ample concern remains that the ECB won’t be able to curb the Eurozone’s dangerous dance with deflation. Many analysts were saying today that even if the ECB launches a full-scale, Federal Reserve-style government bond-buying program later this month that it may be too much too late.

J.C. Penny was back in the news today. The stock surged more than 20% in after-hours trading once it posted a 3.7% gain in same-store sales for November and December. J.C. Penney had been struggling to regain its footing with customers since a botched revamp in 2012. This Holiday season beats out last year’s November/December same-store sales gain of 3.1%.

All of our 10 ETFs in the Spotlight headed south with the conservative ones like XLP, XLV and SPLV holding up the best.

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Stocks Take A Hit To Start Of 2015

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Stocks took their biggest hit in the past couple of months with all major indexes retreating as the chart shows.  Crude oil also plunged down to $49.97/barrel today, which is a nine-year low, while Europe benchmarks fell as much as 3.3%.

Traders are fearful that collapsing oil prices somehow signal the rising risk of a global recession; however, many analysts also countered today saying that there are allegedly plenty of policy tools that central bankers can use to stabilize the global economy.

While oil may be a concern at the forefront of all investors’ attention, another concern may be surfacing. After having climbed steadily since the financial crisis, according to Reuters, the net negative credit balances that investors have in their brokerage accounts is reaching record levels and are now starting to raise concerns about overuse of margin debt among ordinary account holders.

Moreover, with potential short-term interest-rate hikes coming as soon as later this year, paying interest on margin debt could soon become a much bigger burden. However, other analysts were quick to counter saying that as long as the U.S. economy continues to steadily climb upwards then there is no need to worry.

Let’s stay tuned to see how the markets shake off the first day jitters of 2015.

All of our 10 ETFs in the Spotlight slipped to varying degrees. Section 3 shows the “Off High” percentages, which I use as a basis for tracking our trailing sell stops.

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ETFs/Mutual Funds On The Cutline – Updated Through 1/2/2015

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 243 (last week 251) 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. 34 ETFs (last week 35) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 338 (last week 422) above the line and 508 below it out of the 846 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 US Stocks Struggle This Year Due To Weak Overseas Growth?

Ulli Market Review Contact

92835431Equity market returns are going to be flat in 2015, says Jim Bianco of Bianco Research LLC. Bloomberg’s own estimate for earnings-growth is down to 6.5 percent – the lowest level since the Great Recession ended in 2008, instead of the usual 10-11 percent.

On top of that, almost every guess at the beginning of the year is too high, so it’s probably going to come even lower than 6.5 percent. Bottom-line: earnings are not going to be good this year and the estimates are for a very poor earnings year.

Additionally, if the Fed raises rates – which they are unlikely to do, but if they manage to raise rates, falling earnings expectations and elevated rates would be a cocktail for poor stock market, he observed.

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New ETFs On The Block: Flexshares Credit-Scored US Corporate Bond Index Fund (SKOR)

Ulli Bond ETFs Contact

95551488FlexShares, the tenth-largest US exchange-traded fund issuer better known for its suite of “smart-beta” and self-indexed funds, recently launched a US-focused fixed-income fund that puts the spotlight on the middle-maturity offerings.

Northern Trust’s ETF-unit unveiled the FlexShares Credit-Scored US Corporate Bond Index Fund (SKOR), an intermediate-dated bond-fund that focuses on investment-grade corporate bonds with maturities ranging from two to 10 years.

SKOR tracks the Northern Trust Credit-Scored US Corporate Bond Index, an enhanced beta index developed by the fund’s own index shop that aims to lower various systematic and idiosyncratic risks.

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01-02-2015

Ulli Newsletter Archives Contact

ETF/No Load Fund Tracker Newsletter For January 2, 2015

ETF/No Load Fund Tracker StatSheet

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

https://theetfbully.com/2014/12/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-12312014/

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Market Commentary

Friday, January 2, 2015

SLIPPING AND SLIDING INTO THE NEW YEAR

Fri pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Stocks ended mixed in 2015’s first day of trading. The S&P 500 was down about 0.03%, the Nasdaq dropped 0.20%, while the Dow gained a slight 0.06%, however, the numbers were negative over the past week as the chart shows.

A mixed batch of economic data was likely the culprit that made markets stagger. Construction spending fell 0.3% for November, which was surprising to many analysts. Also, the growth in the U.S. manufacturing sector slipped to a 6-month low in December.

It seems fitting, as we start the New Year, to discuss one of the biggest market movers of 2014 – Oil. As you probably all know, oil “tanked” in the second half of 2014. The black gold dropped 46% for the year and is now at a 5 ½ year low.

The winners and losers relating to oil? Airlines and offshore drillers. Southwest Airlines (LUV) was the biggest gainer, soaring 124% last year. Transocrean (RIG) was the biggest loser sinking 63%.

It will be interesting to see how markets get back in swing for the first full week of trading next week. Let’s stay tuned.

5 of our 10 ETFs in the Spotlight managed to close up in today’s see-saw session but no new highs were made as section 3 shows.

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:

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.

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.

3. Trend Tracking Indexes (TTIs)

Our Trend Tracking Indexes (TTIs) stumbled this week with the International one again sliding below its trend line. This indicator has been whipsawing for some time now, and it remains to be seen if this is a sign of more downside to come.

Here’s how we ended this week:

Domestic TTI: +2.65% (last Friday +3.21%)—Buy signal since 10/22/2014

International TTI: -0.88% (last Friday -0.20%)—New Sell signal effective 12/15/14

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 Freden:

Q: Ulli: First of all Happy Holidays and a prosperous 2015.  I enjoy your website and information very much.

Now for my question:  When the international TTI crossed into the positive on 11/24 what made you decide against investing in international broad based ETFs?  I know you had mixed feelings about international stocks, but the trend said “buy”. How do you know when to follow your instinct, and when to follow the trend?  This applies to both buying and selling…

Look forward to hearing your thoughts…thanks and best regards!

A: Freden: Yes, while I have had a negative bias towards the international arena, my main reasons were twofold:

1. We were at the time of the International TTI crossing to the positive 100% invested, and I did not want to disturb our allocations since they were performing well.

2. When reviewing the international section in the StatSheet (section 5), I saw far more negative (red) momentum numbers than in any other area indicating continued weakness.

In the end, it was not my instinct but these facts that kept me out.

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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/