Ulli... The ETF Bully

Stocks Fall Back Into Volatility

Ulli Monday, 6 October 2014, 3:59 PM Market Commentary Contact

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

We had hope last Friday that markets were back on track, but those hopes faded late in the trading day today. Stocks closed slightly lower across the board Monday with the tech sector leading the decline

It has become apparent over the past couple of weeks that, apart from global conflicts, many investors remain uncertain about the outlook for stocks due to the Fed nearing the end of its stimulus program and moving toward rate hikes.

Shares of experimental Ebola treatment maker Chimerix (CMRX) rose 6% Monday on word its product is being used to treat a man infected with the virus in Dallas. The Food and Drug Administration has approved the emergency use of the drug.

The biggest gainer today was CareFusion (CFN). Shares are up 23% to $56.88 after Becton, Dickinson & Co (BDX) agreed to purchase the global medical device company for $12.2 billion in cash and stock. However, the deal has yet to be approved by either CareFusion’s shareholders or U.S. regulators.

2 of our 10 ETFs in the Spotlight managed to eke out a gain while the others declined slightly.

ETFs/Mutual Funds On The Cutline – Updated Through 10/03/2014

Ulli Monday, 6 October 2014, 5:48 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 398 ETFs, of which currently 195 (last week 253) 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. 31 ETFs (last week 46) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 514 (last week 614) above the line and 336 below it out of the 850 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 The Economy See Stronger Wage Pressures Going Forward?

Ulli Sunday, 5 October 2014, 6:01 AM Market Review Contact

The latest non-farm payrolls report showed the US added 248,000 jobs in September. Yet the lack of wage inflation has been a real puzzle and the only missing-piece in the jobs report, said Alan Krueger, a Princeton University economics professor and former chairman of the White House Council of Economic Advisers.

The economy is likely to witness higher wage growth going forward, especially as the unemployment rate continues to decline. Employers have been reluctant to raise wages though they are likely to come under more pressure to do it.

Also, this probably is the best time to raise the minimum wage. In the 1990s, when the economy started to heat-up, the federal government raised the minimum wage that helped in lifting overall wages. With job growth holding above the 200,000 level, there is not much risk to employment at this point in time, he argued.

New ETFs On The Block: First Trust Long/Short Equity ETF (FTLS)

Ulli Saturday, 4 October 2014, 5:58 AM Long/Short ETFs Contact

While the stock markets have rallied on improving economic outlook, strong consumer sentiment and a strengthening labor market, many experts have started to wonder if the five and a half-year bull run is running out of steam on the back of growing Fed rate-hike chatter and geopolitical tensions.

First Trust, the Il-based sixth largest US issuer of exchange-traded funds known in part for its AlphaDex series, introduced a new fund that seeks to provide investors long-term total return in uncertain times. The newly-launched First Trust Long-Short Equity ETF (FTLS) can take long and short positions in US and international equities listed in US with an aim to profit from both rising and falling market conditions.

FTLS is an actively-managed fund and uses earnings-quality for stock screening and intends to employ the Sabrient/Gradient’s EQR model ranking for security selection. The new fund will build long positions in stocks that have high earnings quality and short stocks deemed to have low earnings quality.

10-03-2014

Ulli Friday, 3 October 2014, 3:55 PM Newsletter Archives Contact

ETF/No Load Fund Tracker Newsletter For October 3, 2014

ETF/No Load Fund Tracker StatSheet

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

https://theetfbully.com/2014/10/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-10022014/

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Market Commentary

Friday, October 3, 2014

MARKETS VOLATILE THROUGHOUT THE WEEK, BUT END ON A POSITIVE NOTE

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

It was a topsy-turvy week for markets across the globe; however, most indexes recovered a substantial amount today with the S&P 500 gaining 1.12%, the Dow rising 1.24% and the Nasdaq increasing 1.03%. While a lot of news this week centered on the Hong Kong protests and continued conflict in the Middle East, one may have overlooked some of the more positive economic news that we heard.

The U.S. unemployment rate fell to 5.9% in September, the lowest since July 2008, and 248,000 jobs were added. Job gains for July and August were revised up to 243,000 and 180,000, respectively, from the earlier estimates of 212,000 and 142,000. While that looks good on the surface, it’s noteworthy that almost 93 million Americans are not in the Labor force as the participation rate dropped to a 36 year low. So, if you are curious as to what age group snatched up most of the jobs, take a look at “Hiring Grandparents Only.”

Wages remain stagnant however, with average hourly earnings down a penny from August and 2% higher than a year earlier. Also, initial applications for U.S. unemployment benefits fell by 8,000 to a seasonally adjusted 287,000 in the week ended 27 September, and the four-week moving average fell 4,250 to 294,750.

In corporate news, EBay (EBAY) said it plans to spin off PayPal into a separate publicly traded company in 2015. This marks an about-face after eBay’s fight against activist investor Carl Icahn’s push for the company to split. But, other analysts speculate that the decision is possibly prompted by the new Apple Pay service that is seen as a potential competitive threat.

While all of our 10 ETFs in the Spotlight participated in today’s rebound, no new highs were made.

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:

All of them, except IOO, are currently in “buy” mode, meaning their prices are above their respective long term trend lines by the percentage indicated (%M/A).

Year to date, here’s how the above candidates have fared so far:

To be clear, 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 is taken out in the “Off High” column.

3. Domestic Trend Tracking Indexes (TTIs)

Our Trend Tracking Indexes (TTIs) were mixed this week with the Domestic one remaining on the bullish side of the trend line, while the International one stayed on the bearish side after its Sell signal effective 10/1/14:

Domestic TTI: +1.11% (last Friday +1.55%)

International TTI: -2.08% (last Friday -0.12%)

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 Steve:

Q: Ulli: I was reading through the “how to beat the S&P using the S&P and was thinking about capital gains. They wouldn’t be an issue in a 401K but could impact a standard investment account?

On the surface, I’m guessing that missing the downswings would far outweigh any tax consequences on the gains at sale?

Thanks for all the newsletters and commentary. I appreciate that you share your insights.

A: Steve: Yes, I believe that avoiding the big drops is a far more important issue than tax consequences.

In my view, tax issues are secondary while protection and preservation of capital should always be the primary goal. Those that have experienced the bear markets of 2000 and 2008 can certainly attest to that.

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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/