Increase In Hiring Moves Markets Up; Do You Follow Argentina’s Stock Market?

Ulli Market Commentary Contact

Wed pic

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

Stocks continued to climb on Wednesday, driven by news that businesses added  281,000 jobs last month, up from 179,000 in the previous month. The figure suggests the government’s monthly jobs report, due out Thursday, could also show a significant gain from May. Two of the three major indexes gained slightly as the chart above shows.

Airline stocks took a dip today after Delta (DAL) said revenue per passenger fell on international routes due to decreased travel to Latin America during the World Cup. Delta’s stock fell 5.1%. American Airlines Group (AAL) and United Continental (UAL) were also down sharply.

You may remember me mentioning the GoPro (GPRO) IPO last week. Well, the stock seems to have calmed down as shares of the wearable video camera company were down for the first time since its IPO last Thursday, albeit shares are still trading above $42 — a significant premium above the IPO price of $24.

While world cup fans are consumed with the excitement of the tournament, they might not be aware that Argentina’s stock market is the world’s best performing stock market so far in 2014. The benchmark Mercado de Valores de Buenos Aires (Merval) has gained 47% since January, making it the top performer in a group of 40 global stock markets researched by Bespoke Investment Group.

Four of our ten ETFs in the Spotlight made new highs for the year.

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Third Quarter Off To A ‘Bang’ Just Before 4th Of July Holiday

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

The markets opened the third quarter with a bang as the S&P 500 and Dow both climbed record highs at closing. The Dow was within 2 points of hitting 17,000 for the first time ever before pulling back slightly. The S&P 500 gained 0.7% to close at an all-time high of 1973.32. But, let’s not forget the tech loving Nasdaq that also gained 0.7% today to close at a new 14-year high.

The bullish trading activity today came about despite weaker-than-expected readings on manufacturing in June and construction spending in May. An index of U.S. manufacturing activity unexpectedly fell slightly last month as production dipped. This data seemed to be of little importance to the broader market though as sentiment remained largely positive.

Health care stocks had the biggest advance with gains led by Regeneron (REGN). The company rose $19.53, or 7 percent, to $301.94 after French drugmaker Sanofi (SNY) said in a regulatory filing that it had raised its stake in Regeneron.

General Motors (GM) was able to ‘save face’ a bit today. The stock rose the most in almost a month despite a record-setting string of safety recalls. The automaker reported that its U.S. sales and recalls? increased 1 percent in June.

Our ETFs in the Spotlight joined the rally welcoming the month of July with 6 of them making new highs for the year.

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Halfway Through The Year The S&P Is Up 6%

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

Both the Dow and S&P 500 lost ground slightly after flirting with record highs previously. We are now officially halfway through the trading year and the S&P 500 is up 6%, logging 22 record highs along the way. Over the past two months stocks have resumed their upward trajectory after getting off to their worst start in five years in the first quarter.

Utility stocks also did well. The sector rose 0.8%, making it the biggest gainer of the 10 industry sectors that make up the S&P 500 industry. The utilities sector has done very well overall this year, climbing 16.4% thus far as bond yields have fallen.

American Apparel (APP) dropped 6% after the company announced plans to adopt a shareholder rights plan in an effort to prevented ousted chairman (and founder) Dov Charney from seizing control. The sell-off follows a surge of nearly 30% on Friday.

General Motor (GM) was among the day’s losers. Trading in the auto titan’s stock was briefly suspended in the afternoon after the company announced that it was recalling at least 7.6 million more vehicles dating back to 1997 to fix faulty ignition switches.

Today’s aimless meandering on the last day of the month proved to be a non-event for our ETFs in the Spotlight, although 2 of them managed to make new highs.

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ETFs/Mutual Funds On The Cutline – Updated Through 06/27/2014

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 398 ETFs, of which currently 394 (last week 392) 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. 92 ETFs (last week 90) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 786 (last week 788) above the line and 64 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 Federal Reserve Raise Rates Even If Wages Don’t Pick Up?

Ulli Market Review Contact

92835431The US Fed must re-calibrate their estimates after the disappointing first quarter gross domestic product (GDP) reading as the first six months of 2014 is likely to be flat despite a strong rebound in the second quarter, said Ellen Zentner, Senior US economist at Morgan Stanley. Although the data going into the second half is looking well enough for the Fed to feel optimistic, it’s getting cloudier with prices going up and wages remaining stagnant, she added.

Asked if the Fed is out of sync with the markets, as all leading financial institutions have revised their growth estimates downwards for the year following the release of the first quarter GDP reading on June 19, Ellen said answered in affirmative. Despite the Fed drastically marking down the growth forecast at its June FOMC meeting, it still remains too optimistic for 2014. The US central bank is also overestimating growth for 2015 and 2016, because supposedly the economy will be moving into a rising interest rate environment by then, she observed.

Asked if markets had already factored in the first-quarter reading before Thursday’s official release, thereby removing uncertainties, Ellen answered in affirmative. However, the question now remains what kind of growth rate investors are settling for beyond the second quarter.

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New ETFs On The Block: iShares Core Dividend Growth ETF (DGRO)

Ulli Dividend ETFs Contact

71080438iShares, BlackRock’s exchange traded funds unit, recently expanded its fairly-successful core suite of ETFs to help long-term investors keep more of what they earn. The world’s largest issuer of ETFs added 10 new funds to its Core suite of products to take its ‘broad and cheap’ approach one step further and added investment strategies such as value, growth and dividends to the mix.

One of those new funds, the iShares Core Dividend Growth ETF (DGRO), will compete in an already crowded income-seeking segment that is also gaining popularity because it focuses on dividend growth.

The investment strategy of DGRO is simple, yet powerful; it has a dividend increase streak requirement that is used to screen potential constituents from the universe of dividend paying stocks. This strategy implies companies that continually increase their dividend payouts will ensure bigger long term returns.

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