Stocks Return To Record Territory As GOP Regains Control Of The Senate

Ulli Market Commentary Contact

Wed pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Stocks bounced back into record territory today after the GOP (Republican Party) regained control of the U.S. Senate for the first time in eight years. The S&P 500 gained 0.6% to close at an all-time high of 2,023.57. The Dow also gained 0.6% and closed at a record high of 17,484.53. The Nasdaq, however, dipped 0.1%.

The gridlock between republicans and democrats that will persist in the near future is expected to bode well for Wall St. According to Sam Stovall, U.S. equity strategist at S&P Capital IQ, “the combination of a Democratic president with a republican congress has been accompanied by the best average performance for the S&P 500 since 1945.”

Oil prices changed direction today, halting their recent slide and rising for the first time in a week. Prices rose $1.50 to $78.74 per barrel.

In earnings news, both Whole Foods (WFM) and Tesla (TSLA) posted earnings that topped Wall Street estimates today. Whole Foods said that sales rose 3.1% for Q3 and Tesla said its adjusted gain for Q3 amounted to $3 million of revenue.

We also heard from Time Warner Inc (TWX) today that its Q3 income fell by 18%, but that the company raised their earnings forecast for the full year, which prompted investors to drive the stock higher today. With pay-TV companies paying higher fees to carry its channels and more subscribers ordering HBO, its total revenues for the quarter climbed 3.3% to $6.2 billion.

9 of our 10 ETFs in the Spotlight gained today with 7 of them making new highs for the year.

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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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