Ulli... The ETF Bully

Upward Bias Continues

Ulli Monday, 22 December 2014, 4:27 PM Market Commentary Contact

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Despite a slow start, the major indexes picked up steam during mid-day with the Dow and S&P 500 closing at record levels—again. The theme that the Fed won’t be raising rates at anytime soon proved to be the driver for today’s session.

This was the fourth straight day of gains, since Fed chair Yellen uttered Wall Street’s favorite word in regards to the timing and speed of any rate hikes, namely “patience.” Let’s see how long this word works its magic before it needs to be replaced by a new one.

Economic data were mixed with existing home sales taking a beating during November, as they slowed down to their weakest pace in 6 months. Offsetting this negative was a report on economic growth from the Chicago Fed that was stronger than expected.

9 of our 10 ETFs in the Spotlight participated in the upward momentum and closed up; 5 of them made new highs as table 3 below shows.

ETFs/Mutual Funds On The Cutline – Updated Through 12/19/2014

Ulli Monday, 22 December 2014, 6:14 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 248 (last week 222) 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. 35 ETFs (last week 32) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 418 (last week 440) above the line and 428 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: Have Inflation Expectations Shifted Due To Lower Oil Prices?

Ulli Sunday, 21 December 2014, 6:11 AM Market Review Contact

Federal Reserve Chair Janet Yellen may not be as polished as her global counterparts, but she surely managed to get the US central bank’s message across despite the initial reaction that her press conference Thursday was clumsy and messy, said Carl Tannenbaum, chief economist at Northern Trust Corp.

“Patience and to let the economic outlook evolve in a proper manner, patience with what’s going on with the financial markets due to the events in Russia and also patience with her own committee” where there seems to be quite a divergence of opinion – she did a very nice job by saying the Fed remains focused on long-term fundamentals for both inflation and employment in the US; and by those metrics the choice to begin making small steps towards raising interest rates was the right approach, he noted.

Yellen seemed to suggest the first hike will not take place until June; asked to comment, Carl said she went out of her way to say it won’t occur in the next “couple of meetings” and others on the committee have sort of centered their expectations around the middle of the year.

Of course, there’s a lot that could go on between now and then and chair Yellen took care to explain, as always, the Fed’s decisions are data-dependent. Given some of the uncertainties of the outlook, it’s likely the latter half of the year would be the jumping-off point.

New ETFs On The Block: Cambria Global Momentum ETF (GMOM)

Ulli Saturday, 20 December 2014, 6:07 AM International ETFs Contact

Cambria Investments, the Los Angeles based fund manager better known for its alternative investment strategies, recently launched their fourth product that targets global momentum while adopting a quantitative strategy concurrently.

The Cambria Global Momentum ETF (GMOM) is the second actively-managed fund from Cambria while the other two passively-managed funds are based on in-house indexes and focuses on value and shareholder yield.

GMOM follows a fund of funds strategy and succeeds the AdvisorShares Morgan Creek Global Tactical ETF (GTFF), which Cambria stopped sub-advising in June. The new fund aims at providing income as well as capital growth by using a multi-asset strategy with momentum play and invests in other ETPs (exchange-traded products), Real Estate Investment Trusts (REITs) and closed-ended funds.

12-19-2014

Ulli Friday, 19 December 2014, 3:49 PM Newsletter Archives Contact

ETF/No Load Fund Tracker Newsletter For December 19, 2014

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-12182014/

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Market Commentary

Friday, December 19, 2014

MARKETS IN RALLY MODE; EARLY DECEMBER LOSSES ARE RECOUPED

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

One look at the above 5-day chart tells the story. A sloppy beginning was followed by a strong rebound as the major indexes attempted to take out their old highs but fell short. Nevertheless, it was a turbulent but successful week as the Russian ruble collapsed and oil prices fluctuated wildly while trending lower.

As has been the case in the past, the rally was not based on changing fundamentals or an improving economy but merely jawboning by the Fed as the use of words like “patient” and “methodical” in regards to future interest rate hikes were designed to soothe investors’ nerves. It worked and equities occupied a world of their own also supported by some rumors that oil prices may have found a bottom and are likely to rise from here. I’ll believe it when I see it.

It also remains to be seen if this freshly hyped upside momentum can be sustained or if this entire move turns out to be one gigantic dead cat bounce. In the meantime, we will enjoy this market recovery as long as it lasts.

Most of our 10 ETFs in the Spotlight joined the rally with 3 of them making new highs as table 3 below 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:

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:

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) improved this week with the Domestic one now firmly entrenched on the bullish side of its trend line. Internationally, we are still stuck on the bear side, but the index is threatening to break through to the upside again.

Here’s how we ended this wild week:

Domestic TTI: +3.21% (last Friday +1.82%)—Buy signal since 10/22/2014

International TTI: -0.20% (last Friday -1.60%)—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 Mel:

Q: Ulli: First, thank you for all you do, and thank you for making your analyses, obviously obtained at great cost and effort by you, available to all of us free of charge. You have helped me greatly over the years (since 2009) that I’ve been following you.

But, with the Domestic TTI approaching sell territory, I am concerned about another whipsaw, as I am sure you are too. Is the move since mid-October a dead-cat bounce, or is this decline another bearish feint in a long-term bull market?

Jack Schannep, whom I’ve been following for the past few months, is rated by Hulbert as one of the very best timers. He asks in his Nov. 29 letter, “Did the recent market weakness ‘trick’ anyone you know?” (meaning the October drop). Well, it did trick me, and I recall that he flashed a warning but his methodology avoided a sell signal at the last minute. It’s a quite complicated method based partly on Dow Theory, but a lot goes into it, and I want to ask if you are aware of it, and if you have any comments that you could share with us without revealing the proprietary aspects of your own TTI approach. He goes into a lot of detail about his method, laying out each decision in a step-by-step fashion, so it would be easy for you to evaluate it, although you would have to be a subscriber.

Thank you for all you do, and thanks in advance for any answer you can offer to my question.

A: Mel: Sure, another whip-saw is always a possibility. I recall that during extreme volatile times in the market place over the past 25 years, I have seen a whip-saw signal more often than not prior to the onset of a severe bear market.

I look at the exit strategy as my insurance policy. Personally, I have insurance on my house, my car, my health not because I expect it to be used but more so to be covered in case a major disaster strikes. I apply that same theme to my investments. I know that at times whip-saw signals occur, and I have learned to simply accept them for what they are. Trying to apply a different rule based on the personal interpretation that this sell-off may be different can backfire big time, as no one can ever be sure whether the bear is about to strike and wipe out years of portfolio accumulation.

I like to keep the strategy of exiting and entering the markets as simple as possible since that very approach has served me well in avoiding the brunt of all of the severe market downturns we’ve seen over the past 25 years.

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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/