On April Fool’s Day The S&P 500 Rises To Record

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

On this very April Fool’s day, domestic equities rallied for the second day in a row, powered by consumer and technology stocks, and pushed the benchmark S&P 500 to an all-time high as the chart above shows.

Optimism prevailed as the ISM index rose in March indicating that the economy may not have suffered as much as a result of the harsh winter conditions as had been assumed. Further helping upside momentum were comments from new Fed chief Yellen yesterday that monetary stimulus would be needed for “some time” due to “considerable slack” in the labor market.

That’s all it took and up we went. The S&P 500 finally managed to close above the 1,880 level after having nibbled on it several times over the past few sessions. While the month of March was a mixed bag for some areas, especially tech and small caps, the benchmark indexes SPY and RSP held up well supporting the long-term bullish trend.

Our 10 ETFs in the Spotlight headed higher with 5 of them making new highs today; 9 of them are now on the plus side YTD.

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First Quarter Was Shaky; But Ends On A Positive Note

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

The first quarter of 2014 has officially come to a close. The first three months of the year rattled investors to say the least. From tensions between Russia and the West over Ukraine and the winter storms that froze the U.S. economy in January and February. As a result, investors focused their attention on buying and holding “safe” investments, such as bonds, dividend-paying stocks, and gold.  It is safe to say that, given all of the volatility, we remain in a good spot moving towards Q2.

Here are the final 2014 first-quarter returns for the major U.S. stock indexes: S&P 500: +1.3%, Russell 2000: +0.8%, Nasdaq composite: +0.5%, Dow Jones Industrial Average: -0.7%.

Riskier growth-oriented stocks, particularly in biotechnology, consumer discretionary and technology stocks, fared the worst this quarter, while utility and health care stocks (i.e. dividend paying stocks) rose 9% and 5.5% respectively.

In M&A news, healthcare giant Johnson & Johnson Co. (JNJ) has accepted a $4.15 billion offer from private-equity giant Carlyle Group L.P. (CG) to acquire its Ortho-Clinical Diagnostics business. Johnson & Johnson, like other major drug makers, has been divesting non-core businesses and cutting costs amid generic competition.

Our 10 ETFs in the Spotlight rallied along with 4 of them making a new high today; 9 of them are now on the plus side YTD.

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ETFs/Mutual Funds On The Cutline – Updated Through 03/28/2014

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 364 (last week 356) 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. 75 ETFs (last week 67) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 696 (last week 727) above the line and 153 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 Debt Overhang Delaying The US Recovery?

Ulli Market Review Contact

92835431US interest rates are expected to rise in the middle of 2015 or even later, though it would probably be appropriate to hold them lower a little longer than that, said Federal Reserve Bank of Chicago President Charles Evans. A lot will depend upon the data and how quickly inflation moves up to the central bank’s target of 2 percent, Charles said.

Asked if the US economy could hit the targeted 2 percent inflation rate sometime in 2015 given the difficulties in stimulating demand, Charles said his own expectation is that inflation is going to be one and three-quarters in 2016. There’s hope the economy will get a lift in inflation and expectations are closer to the 2 percent objective, though actual inflation expectation about is 1.1 percent or 1.75 percent depending upon how one massages the data.

Cost pressures are minimal for raw materials and labor, and there’s no cost-push that could lift prices. A stronger economy is needed to get wage pressures moving and have that passed on in the form of higher inflation, which probably could happen in 2016 and beyond, he noted.

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New ETFs On The Block: State Street SPDR Barclays International High Yield Bond (IJNK)

Ulli Bond ETFs, International ETFs Contact

91551519The unwinding of the Federal Reserve’s bond purchase program, and the gradual improvement of the US labor market, will result in a hike in interest rates, possibly by the spring of 2015 as mentioned by Fed chairwoman Janet Yellen after the last FOMC meet.

Anticipating the shift, many investors are steering clear of long-duration US Treasuries and corporate bonds, but are unsure about how to replace the high-grade fixed-income assets that were once the foundation of their portfolios.

To bridge this gap, Boston, Massachusetts-based State Street Global Advisors, the second-largest US issuer of exchange-traded funds, unveiled the SPDR Barclays International High Yield Bond ETF (IJNK). The new fund tracks the Barclays Global ex-US Issuers High Yield Corporate Bond Index, a gauge that measures the performance of ex-US high yield corporate income markets, including securities from emerging markets. The securities in the index must have a minimum $350 million in market capitalization in local currency terms and at least one year remaining to maturity.

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03-28-2014

Ulli Newsletter Archives Contact

ETF/No Load Fund Tracker Newsletter For March 28, 2014

ETF/No Load Fund Tracker StatSheet

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

https://theetfbully.com/2014/03/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-03272014/

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Market Commentary

Friday, March 28, 2014

A CHOPPY WEEK FOR THE U.S.; BUT SIDEWAYS IS BETTER THAN DOWN

Fri pic

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

Global stock markets moved in different directions this week, with major indices in Europe and Asia gaining broadly, while US stocks bounced around. The technology-heavy Nasdaq Composite Index came under pressure from profit taking in high-flying biotechnology and new-generation technology stocks. The S&P 500 finished slightly lower for the week.  With one trading day left in March, stocks are up 0.5% on the year and will be aiming for a fifth consecutive quarter of gains.

Broadly, the outlook for the domestic and global economy remains favorable amongst Wall Street analysts, as many developed economies, including the U.S. and Europe, are poised for hopefully improving growth this year, helping offset the slowdown in some emerging markets. Revisions to real gross domestic product showed the economy rose at a 2.6% annual rate in the fourth quarter, slightly faster than the previous estimate.  The upward revision was primary a result of stronger personal spending, which leads us to look at consumer confidence, which rose in March to its highest level since January 2008.

In corporate news this week, we received word that Lehman Brothers will pay out another $17.9 billion to creditors, bringing its total payout to date to about $80.4 billion since leaving Chapter 11 bankruptcy on 6 March 2012. King Digital Entertainment (KING), the maker of the popular mobile video game Candy Crush Saga, had the worst performing initial public offering this year. The stock fell close to 16% in its first day, and slid further the next day. The big concern is that the company could be a one-hit wonder that has already seen its best days.  The failed IPO is once again an indication as to how tricky IPO valuations can be.

Our 10 ETFs in the Spotlight vacillated with the indexes with 2 of them making a new high today; 7 of them are remaining on the plus side YTD. Please note that I have adjusted the “Basis” and the “High” price, used to calculate our trailing sell stops, for the dividends paid in the first quarter. See the YTD table below for details.

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.

3. Domestic Trend Tracking Indexes (TTIs)

Our Trend Tracking Indexes (TTIs) showed a mixed picture again and ended the week as follows:

Domestic TTI: +2.48% (last Friday +3.24%)

International TTI: +3.37% (last Friday +2.96%)

Have a great week.

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 Ken:

Q: Ulli: I follow you via Twitter and noticed that you publish Friday’s newsletter edition around 4 pm PST. About an hour later you publish an update, but I can’t seem to figure out what has been updated. Could you explain?

A: Ken: Sure, when I publish the newsletter, I don’t have all weekending values available by 4 pm. The update I post later in the day makes a correction to the Trend Tracking Indexes (TTIs) when the weekly moving averages are being adjusted. These data points become available later on, hence the update.

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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/