Falling Oil Prices Drag Markets Lower

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Stocks closed mostly lower today, primarily driven by falling oil prices and renewed fears of a global economic slowdown. The S&P 500 dropped 0.29%, the Nasdaq fell 0.32%, while the Dow gained 0.10%.

Oil prices fell to a three-year low as Saudi Arabia cut prices of crude exported to the U.S.

A barrel of U.S. crude fell as low as $75.84 a barrel Tuesday before rebounding to $77.19, down 2% for the day, still the lowest closing price since October 4, 2011. Crude has come under severe pressure in recent weeks amid fears of reduced demand around the globe due to slowing growth in places like the eurozone and China. As a result, shares of major U.S. oil stocks, such as Exxon-Mobil (XOM), Chevron (CVX) and ConocoPhillips (COP) suffered losses today.

In other economic news, we heard today that the U.S. trade deficit rose in September to its highest level since May as exports fell. The Commerce Department said the trade deficit widened to $43.0 billion in September, up from a revised $40.0 billion in August.

Here’s a bit of info that might brighten your day though. November is the second-best performing month for the past 20 years. It also starts the best six-month “bull” period going back to 1950. And finally, after the stock market’s stunning rebound the past two weeks, November started with both the Dow and S&P 500 indexes back at record highs.

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Out With October Scares And Into November We Go

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

October, the spooky, volatile month best known for stock market crashes, is finally over after giving investors a brief, frightful scare. However, stocks retreated slightly today as oil prices tumbled more than 2% to below $79 a barrel. The S&P 500 dropped 0.01%, the Dow fell 0.1% and the Nasdaq squeezed out a slight gain rising 0.2%.

To me, it seemed investors were taking a “wait and see” approach today as they await a slew of economic news due this week, which includes the latest government report on monthly job gains and the unemployment rate. Also, the mid-term elections, which are just one day away, may be adding to the hesitancy we saw in trading today.

Not all news is bad though, as November typically has a market-friendly reputation and historically has been the beginning of the most bullish six-month period for U.S. stocks.

Investors will likely be targeting the effects of the Fed winding down their quantitative easing program. The general feeling throughout news today is that stock investors will be grappling with the prospect of coming interest rate hikes from the Fed in 2015, and the market is likely to become more volatile as projections of when the first rate hike will come moves either forward or backward due to incoming economic data.

Despite the ups and downs of the day, 8 of our 10 ETFs in the Spotlight managed to close higher.

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ETFs/Mutual Funds On The Cutline – Updated Through 10/31/2014

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 287 (last week 210) 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. 48 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 700 (last week 498) above the line and 149 below it out of the 849 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: Do US Bond Yields Reflect A Deflationary Global Environment?

Ulli Market Review Contact

92835431The Japanese economy is growing at less than 1 percent while annual inflation rate is hovering around a paltry 1.2 percent. The Bank of Japan wants to go all in, which explains the BoJ’s latest decision to launch an open-ended QE, said Mark Kiesel, chief investment officer of global credit at Pacific Investment Management Co.

The central bank will continue with money-printing until it gets an annual inflation rate of 2 percent. BoJ has increased the annual purchases of Japanese Government Bonds by 30 trillion yen, which is a big move, he noted.

Asked if Europe is likely to follow Japan next year amid tepid growth and flood the global economy with liquidity, Mark said with government debt levels high in both Europe and Japan, monetary policy is the only option. Central banks all over the world are going to go all in more than most investors think because monetary policy is the only game in town right now, he observed.

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New ETFs On The Block: Arrow DWA Tactical ETF (DWAT)

Ulli Bond ETFs, Equity ETFs, Long/Short ETFs Contact

91551519Arrow Investment Advisors, the Maryland-based advisor to Arrow Funds known for its offerings of open-ended tactical and alternative mutual funds, expanded its exchange-traded funds lineup with the launch of the Arrow DWA Tactical ETF (DWAT).

The go-anywhere actively managed fund seeks long-term capital appreciation while preserving capital and aims to achieve its investment objective based on the proprietary Dorsey Wright Relative Strength Global Macro model.

Hedge Funds across the globe implement the Global Macro model extensively and DWAT gives retail investors an opportunity to seek exposure in a strategy that shifts holdings in response to global macroeconomic trends.

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10-31-2014

Ulli Newsletter Archives Contact

ETF/No Load Fund Tracker Newsletter For October 31, 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-10302014/

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Market Commentary

Friday, October 31, 2014

MARKETS TOP OFF RECORD WEEK; JAPAN ADDING STIMULUS TO ECONOMY

Fri pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Markets finished notably higher on the week, led primarily by technology stocks. Both the S&P and Dow closed at record highs Friday, and for the week the S&P 500 finished up 2.72%, the Dow gained 3.48% and the Nasdaq rose 3.28%.

Most of the market gains today were driven by the mother of all assists via news that Japan decided to add more stimulus to its ailing economy. The country’s central bank (BofJ) announced unexpectedly it will boost asset purchases in an effort to jump-start its lagging economy and try to boost inflation, which is dangerously low. How convenient! As the Fed’s QE ended this past week another one gets started indicating to me that the global slowdown is far worse than is being admitted.

Even with gasoline prices in an apparent free-fall, Exxon Mobil (XOM) figured out a way to post strong Q3 earnings. The company said today that its profits were up 3% for the quarter thanks to a very strong performance from its refining business. Profits at the company’s refining operations, which produce chemicals and fuels, rose 38% in the quarter.

On the downside, we heard today that U.S. consumer spending fell in September, which was the first decline since January. Investors were a bit taken aback given that the spending decline followed a big 0.5% increase in August. However, economists believe September was a temporary pause as continued hiring gains will push up spending and the overall economy in coming months.

Our ETFs in the Spotlight joined this week’s party and rallied. The scary mid-October drop into bear market territory is now in the rear view mirror as a total of 3 verbal assists by Fed governor Bullard, ECB head Draghi and now the BofJ combined to make investors feel the warm fuzzies again.

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

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 has been taken out in the “Off High” column.

3. Trend Tracking Indexes (TTIs)

Our Trend Tracking Indexes (TTIs) improved with the Domestic one now clearly being established on the bullish side of the line. The International one greatly improved this past week, but it remains stuck in bear market territory, although by only a fraction of a percent.

Here’s how we ended the week:

Domestic TTI: +2.93% (last Friday +1.54%)—Buy signal since 10/22/2014

International TTI: -0.39% (last Friday -2.40%)—Sell signal since 10/1/2014

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 Dennis:

Q: Ulli: Thought you may be interested in this video with Carter Worth who gives some stats on corrections of the S&P. You happen to use 7% as the point to give out corrections.

Carter, a prominent technician on Wall St, gave stats since 1927 mkt down turns. The stats showed him break points of 5% down it will go down more. He got a mean of 12% and 8.2% as median. You may consider using the power of his stats with your system. So if it goes down further from 5% perhaps use 5% as your dump or 1/2 out at 5% and 8.2% as all out to capture more of your profits. His point was its only down 7.1% as of the discussion. At one level, it may seem to avoid the whipsaws if 8.2% is the range of the bounce back. Ulli, was there a statistical reason that you picked 7% to bail?
http://video.cnbc.com/gallery/?video=3000319566&play=1

A: Dennis: I arrived at the -7% level via trial, error and experience. Remember, that 7% is a soft number. As I’ve posted before, we never put in sell stops ahead of time but use day-ending prices only. The -7% level is my alert point; if I see a break below -7.5%, I will take action the next day unless there is a rebound in the making. Via this approach, our exit point ends up being closer to -8%.

Sure, selling some assets at -5% and the balance later on, is possible. However, over the past 25 years I have found that this approach can have merits in certain environments and does not work well in others. In the end, you have to make up your own mind to decide what works best for you. In the bigger scheme of things, the goal here is to avoid going down with a bear market. There is not just one way to accomplish that.

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