Retail Numbers Drag Markets; MSFT Unveils Surface Pro 3…Are You Excited?

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

Markets finished the day all covered in red, with the indexes retreating as the chart above shows. All 10 primary S&P 500 sector indexes fell, and nearly three-fourths of Nasdaq-listed names were down for the day.

Yesterday, I mentioned that there were still a few notable companies due for earnings reports this week. Well, Staples (SPLS) and TJX (TJX) reported today, and the results were disappointing to say the least; the effect of that news rippled across the broad spectrum of retail stocks and was responsible for pulling markets down today.

In the auto world, General Motors (GM) shares took a tumble after the company announced it is recalling another 2.6 million vehicles globally, raising the number of vehicles it has recalled so far this year to almost 15.4 million. And in tech news, Microsoft (MSFT) unveiled the Surface Pro 3 tablet at an event in New York today, as it attempts to fuel interest in its struggling tablet line amid increasing competition. The unveiling had little impact on the stock, which actually dropped 0.18% today.

Tomorrow, we will hear the latest Fed minutes, which should be interesting in that the U.S. economy remains forecast to continue growing.

Our 10 ETFs in the Spotlight slipped along with the indexes; 8 of them remain on the plus side YTD.

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Markets Respond Mixed To M&A News As Q1 Earnings Season Winds Down

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

Stocks dwindled around breakeven for most of the day, but finished strong led by Internet stocks and mixed M&A success. All the major indexes closed higher as the chart above shows.

In M&A news, AstraZeneca (AZN) rejected yet another takeover bid from Pfizer (PFE). AstraZeneca rejected a revised £69 billion ($116 billion) bid from Pfizer, saying the U.S. company’s “final” offer is inadequate and would present significant risks for shareholders. The most recent offer would give AstraZeneca shareholders 26% of the merged company, indicating that there is a small window for a higher cash component. Pfizer has said though that the £55 per share bid is “final” and that it would not go hostile.

Shares of AT&T (T) also slumped today after the company’s $48.5 billion bid for satellite TV operator DirecTV (DTV) was rejected.

First quarter earnings season continues to wind down in the U.S. More than 90% of companies have posted results and profit gains among S&P 500 stocks are up just more than 2% from a year earlier, according to FactSet. Campbell Soup (CPB) experienced a 2.4% drop today after reporting weaker-than-expected quarterly sales and lowered its full-year revenue growth forecast. Home Depot (HD), TJX (TJX), Lowe’s (LOW), Target (TGT) and Hewlett-Packard (HPQ) are among notable companies slated to post results throughout the week.

Our 10 ETFs in the Spotlight edged higher although no new highs were made today; 9 of them currently remain on the plus side YTD.

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ETFs/Mutual Funds On The Cutline – Updated Through 05/16/2014

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 338 (last week 338) 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. 81 ETFs (last week 81) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 591 (last week 587) above the line and 258 below it out of the 859 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: Is The European Central Bank Likely To Cut Refinance Rates In June While Refraining From QE?

Ulli Market Review Contact

92835431The eurozone grew in the first quarter despite no mending of balance-sheets at the macro-level and stagnation in France and the Netherlands, said David Owen, Chief European Economist at Jefferies International.  The building blocks for a sustainable and strong-based recovery were not simply there. Inflation in May is likely to print at or below 0.5 percent, which will put pressure on the European Central Bank President Mario Draghi to act in June, he noted.

Asked if Darghi will use traditional tools when the ECB meets in June, David said Draghi should have initiated unconventional tools such as quantitative easing way back in 2011. QE will be a less powerful tool now than back then. As asset prices have reflated and spreads have been coming down across the eurozone, quantitative easing is obviously not on the agenda for the ECB right now.

Rather, cutting the refinance rate into the negative zone almost looks like a done deal now after the ECB’s press conference last week. The other thing that the ECB is looking at is the LTRO and linking it to public lending like they have done in the UK, particularly for SMEs (Small and Medium Enterprises). It is important for the ECB to communicate clearly to the markets that banks can lend at close to zero (interest rates) for four years, only if they lend to SMEs, which will be a very powerful message.

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New ETFs On The Block: The iShares Yield Optimized Bond ETF (BYLD)

Ulli Bond ETFs Contact

104394781iShares, the exchange-traded funds arm of BlackRock Inc, has launched a “fund of funds”  in an effort to offer investors decent returns in a low interest rate environment. The iShares Yield Optimized Bond ETF (BYLD) is the latest addition to its portfolio of bond ETFs and aims to solve the risk-reward conundrum.

With the Fed announcing in no uncertain terms that interest rates will remain low for an extended period of time, analysts expect yields to remain weak at least for this year. In such an environment, investors are likely to be left with two unattractive choices: invest in risky high-return/junk bonds or stay content with lower yields on higher-rated bonds.

The new fund tracks the Morningstar US Bond Market Yield-Optimized Index, a gauge comprised of seven ETFs that collectively seek to deliver superior income while maintaining long-term capital appreciation. Interestingly, all the ETFs included in the index are issued by iShares itself and targets various  fixed-income categories including Treasuries, TIPS, investment-grade corporate or floating-rate bonds, mortgage backed securities, high yield debt and agency bonds.

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05-16-2014

Ulli Newsletter Archives Contact

ETF/No Load Fund Tracker Newsletter For May 16, 2014

ETF/No Load Fund Tracker StatSheet

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

https://theetfbully.com/2014/05/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-05152014/

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Market Commentary

Friday, May 16, 2014

GOING NOWHERE

Fri pic

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

This was the week in which the S&P 500 attempted to break through its psychologically important 1,900 milestone marker. We came close on Monday and Tuesday before the bears gained the upper hand on Thursday, as the above 5-day chart shows. Today’s modest rebound, for which we may thank the ever lurking buy-the-dip crowd, left the benchmark index unchanged for the past five trading days.

We’ve seen this before, as sell-off attempts were taken as opportunities for buyers to step in and reverse what appeared to be the start of a downtrend. Fueling this pattern has been a generally positive market outlook.

On the economic front, construction on new US homes surged last month topping economists’ forecasts indicating that the rebound from a tough winter may still have some legs. On the negative side, consumer sentiment fell unexpectedly in April leaving bulls and bears stuck in a tug-of-war.

Our 10 ETFs in the Spotlight followed the roller coaster ride; no new highs were made today and 8 of them remain on the plus side YTD.

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.

In other words, none of them ever triggered their 7.5% sell stop level during this time period, which included a variety of severe market pullbacks but no move into outright bear market territory.

Here are the 10 candidates:

MaxDD

All of them are 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:

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 is taken out in the “Off High” column.

3. Domestic Trend Tracking Indexes (TTIs)

Our Trend Tracking Indexes (TTIs) meandered without making any clear headway, but both remain on the bullish side of the trend line by the following percentages:

Domestic TTI: +2.09% (last Friday +2.05%)

International TTI: +3.01% (last Friday +2.87%)

Have a great 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

A note from reader Joseph:

Q: Ulli: This is more a comment than a question. I really like your 10 ETFs in the Spotlight addition, which I follow daily. I used to be the type of investor who could not be invested in too many mutual funds and/or ETFs.

I now use the spotlight ETFs as my guide, have reduced my total holdings sharply, update my trailing stops daily and have found that my investing endeavors currently not only take much less time but also have reduced my emotional decision making in the process. I am much more relaxed and feel confident that I can better handle the uncertainties of the market place. Thanks for that.

A: Joseph: While I don’t dwell on this often enough, the issues you have addressed exactly describe the main benefits of the trend tracking methodology. Having a plan in place that deals with whatever the market gives you, let’s you make better decisions and, as importantly, allows you to sleep better at night.

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WOULD YOU LIKE TO HAVE YOUR INVESTMENTS PROFESSIONALLY MANAGED?

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/