Fed Commentary Takes Starch Out Of Upward Momentum

Ulli Market Commentary Contact

Wed pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Stocks took a dive today, ending another wild ride with a plunge deeper into the red after the Federal Reserve’s latest policy statement.

The Federal Reserve gave no indication today that it would stand down from plans to raise interest rates this year, noting that it expects unusually low inflation to gradually pick up as the “transitory effects” of tumbling oil prices fade.

Speaking of the slick commodity, oil prices slid again today. U.S. crude oil fell 4%, volatile as it has been and plunged deeper into the red after the Federal Reserve’s latest policy statement. The Fed used more positive language to describe the outlook for the economy and the job market here at home; however, it seemed that Wall Street wasn’t buying into it.

In tech, Facebook (FB) topped earnings estimates for the seventh straight quarter. Facebook reported fourth-quarter revenue of $3.85 billion, an increase of 49% from $2.59 billion in the fourth quarter of 2013. Analysts had expected revenue of $3.77 billion. So, there is much to tip your hat to if you are looking at Facebook’s numbers to kick off the year.

Slipping and sliding, all of our 10 ETFs in the Spotlight headed south with the financials (IYF) leading the way by surrendering -1.82%; YTD, however, 4 of them still remain on the plus side as you can see in section 2.

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Markets End Lower, But Not Without Hope From Economy And Airlines

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Major indexes ended lower today. However, not without seeing a blue sky. Yahoo shares rallied 6% after the company said it would spin off its remaining holdings in Alibaba into a separate entity. Stock in the new investment company created by the tax-free move, SpinCo, will be distributed to Yahoo shareholders. Speaking of Yahoo (YHOO), the company reported a revenue drop to $1.25 billion, slightly down from $1.27 billion in the year-ago quarter, while earnings were about half of what they were, which was $166 million this quarter versus $348 million in 2013.

In more tech news, we heard news from Apple today. Apparently, investors were expecting a huge holiday quarter from the company. Well, Apple did even better. The company’s shares jumped more than 5% today in after-hours trading. Apple said it collected $74.6 billion in sales, up 30% from last year, and also earned net income of $18 billion, up 37%, in its fiscal first quarter, which is the biggest of the year.

We heard great news from the airline industry today. The four major airlines all reported huge profits for 2014 in the past week. Airfares in 2014 were at their highest level since 2003, according to Department of Transportation inflation-adjusted figures. And flights in the USA ran at 81.6% capacity in the first 10 months of 2014 — a record level that is likely to continue to increase. At some airports, such as Atlanta’s Hartsfield-Jackson, Denver International and Orlando, Palm Beach and Fort Myers in Florida, departing flights were more than 85% full last year.

To no surprise, all of our 10 ETFs in the Spotlight joined the downward momentum and slipped; however, 5 of them still remain on the plus side YTD as section 2 shows.

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Stocks Borderline, But Positive To Begin The Week

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Stocks ended higher Monday, with the Dow basically flat, as investors grappled with the consequences of a victory for Greece’s anti-austerity Syriza party in general elections.

In corporate news, Microsoft (MSFT) shares dipped slightly today, even after the software giant reported a spike in revenue and profits in line with analyst estimates. The company posted $26.5 billion in Q2 revenue, compared with $24.5 billion a year ago. As Microsoft enters its 40th year of existence, its middle-age persona is increasingly keen to major changes in computing — including Big Data, mobility and the cloud — while reducing its dependence on PCs.

In the European Union today, European equities rose and the Euro strengthened, while Greek stocks retreated, after Syriza, whose leader has pledged to renegotiate an international bailout, won 149 out of a possible 300 seats in Parliament.

In earnings, prepare for a flood of earnings reports this week from some of the biggest names in Silicon Valley, including Apple (AAPL), Yahoo (YHOO), Facebook (FB) and Google (GOOG).

All of our 10 ETFs in the Spotlight gained with 6 of them remaining on the plus side YTD as section 2 shows.

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ETFs/Mutual Funds On The Cutline – Updated Through 1/23/2015

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 244 (last week 217) 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. 41 ETFs (last week 38) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 291 (last week 223) above the line and 529 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 Europe’s Banking System Remain Weak?

Ulli Market Review Contact

92835431The one thing that stood out in Thursday’s QE announcement by the European Central Bank was how they managed market expectations, said Bob Parker, senior Advisor at Credit Suisse Asset Management.

There was fear in the markets that the ECB would fail to meet expectations, but the central bank managed them very well. They came out with a program, which was well in excess of market expectations. That explains the drop in bond yields on Thursday and Friday.

Ten-year yields in Italy and Spain fell below 1.5 percent, and they are likely to stay there for some time in future. Also, the ECB may be very careful about what it says in public, but it must be very happy with the devaluation of the euro in private, given the fact the euro has come down to about $1.13 now from $1.39-$1.40 in last May-June, he added.

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New ETFs On The Block: Cambria Global Asset Allocation ETF (GAA)

Ulli Bond ETFs Contact

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Cambria Investment Management, the CA-based exchange-traded fund issuer better known for its alternative investment strategies (or Alts), did an encore recently by taking the “low-fee” concept a step further: it launched a zero-fee fund.

Cambria’s latest product – Cambria Global Asset Allocation ETF (GAA), charges 0.00 percent in management fees. Rather, it charges a modest 0.29 percent for meeting annual operating expenses to cover the average expense-ratio of the underlying 29 ETFs held by the portfolio.

GAA is essentially a “fund of funds” that invests in other ETFs. The actively-managed fund seeks to replicate the performance of a truly diversified global portfolio and invests in a basket of US and foreign equities, bonds, REITs, currencies and commodities.

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