Ulli... The ETF Bully

Markets Eke Out A Gain Driven By M&A Activity

Ulli Monday, 16 June 2014, 3:52 PM Market Commentary Contact

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

Stocks mostly hovered between small gains and losses through much of the day as traders monitored the conflict in Iraq and considered its potential impact on oil prices. The S&P 500 gained 0.10%, the Dow added 0.03% and the Nasdaq posted a 0.24% gain. The markets have shown a lack of volatility recently, especially compared to the chaotic Q1 we experienced earlier this year. According to the WSJ, Monday was the 41st day in a row that the S&P 500 did not move more than 1% in either direction.

On the M&A front, medical device heavyweight Medtronic Inc (MDT) agreed to buy Dublin-based Covidien Plc (COV) for $42.9 billion and shift its executive headquarters to Ireland. The deal is seen mostly as a way for Medtronic to take advantage of lower tax rates abroad. Also, I heard today that Fusion-io Inc’s (FIO) shares jumped up 22.4% to $11.36 after SanDisk Corp (SNDK) said it will buy the company for about $1.1 billion to boost its flash storage drive business. SanDisk’s shares also gained a hearty 3.6% to $102.00.

Equities also got a boost today from the announcement by the Federal Reserve that factory production increased 0.6% last month with output improving across numerous industries. Manufacturing output in May was led by a 1.5% jump in motor vehicle production. There were also gains in the output of machinery, computer and electronic products, electrical equipment and appliances, and fabricated metal products. Production of primary metals, however, slipped. Finally, the Fed is expected to announce a further cut to its monthly bond purchasing program, but is not seen raising interest rates until mid-2015.

Our 10 ETFs in the Spotlight went sideways with 9 of them remaining on the plus side YTD.

ETFs/Mutual Funds On The Cutline – Updated Through 06/13/2014

Ulli Monday, 16 June 2014, 6:02 AM 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 376 (last week 384) 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. 86 ETFs (last week 87) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 749 (last week 757) above the line and 101 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: Is The Fed Likely To Raise Rates In The Second Half Of 2015?

Ulli Sunday, 15 June 2014, 6:01 AM Market Review Contact

When the US Federal Reserve says there’s a slack in the economy, it means lack of activity in the labor market and an unemployment rate higher than where it should be to generate sufficient inflation, said Neil Dutta, head of US Macroeconomics at Renaissance Macro Research.

There have been both optimistic and pessimistic opinions about the state of the economy. Asked which part of the economy matters most, Neil said the labor market trumps all else. The first quarter of this year was a throw away and economists might be downgrading Q1 for all sorts of technical reasons.

The earnings numbers show productivity didn’t collapse in the first quarter. At the end of the day, generating more than 200,000 monthly jobs is an achievement. The GDP data is noisy and will be subjected to multiple revisions. If the job growth continues at current pace, it’ll be a matter of time before wages pick up, he noted.

New ETFs On The Block: iShares Interest Rate Hedged Corporate Bond ETF (LQDH)

Ulli Saturday, 14 June 2014, 6:20 AM Bond ETFs Contact

The market has been wary of an early rate hike by the US Fed for some time now following the recent spate of robust economic readings. The jobless rate is improving steadily while the monthly nonfarm payroll data has been picking-up gradually, signaling a continuing recovery in the labor market.

The Fed is expected to maintain its current pace of tapering and wind down its assets purchase program by October. Once the money printing stops and inflation starts to take hold, the Fed will be forced to mop up the excess liquidity from the economy. But asset-sales by the Fed may not follow soon as the central bank remains anxious about a sudden rise in long-term interest rates, derailing the recovery. Minutes from the last meeting in April make no mention of such plans either.

A similar view is prevalent in the financial markets as well. James Bullard, president of the Federal Reserve Bank of St. Louis, said in a recent seminar that investors are worried about the central bank starting an asset-sales program next year. An early intervention, they fear, will cause a sudden spike in interest rates, making it difficult for consumers to make purchases on credit and companies to borrow long term.

06-13-2014

Ulli Friday, 13 June 2014, 4:17 PM Newsletter Archives Contact

ETF/No Load Fund Tracker Newsletter For June 13, 2014

ETF/No Load Fund Tracker StatSheet

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

https://theetfbully.com/2014/06/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-06122014/

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Market Commentary

Friday, June 13, 2014

INDEXES SHOW SOME ENTHUSIASM ON FRIDAY, BUT NOT ENOUGH TO MAKE IT A GOOD WEEK OVERALL

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

The major indexes posted bounced back modestly today, but the recovery was not strong enough to pull the markets back into the green for the week. The S&P 500 added 0.3%, narrowing its weekly loss to 0.7%, while the Nasdaq, which gained 0.3% today, ended the week lower by 0.3%.

The impact of economic news was mixed this week. Slightly disappointing reports on US weekly initial jobless claims and retail sales were offset by near-seven-year highs on small business confidence and job openings. Japan reported a stronger-than-expected upward revision to first-quarter economic growth, and China’s economy showed signs of stabilizing via its increased industrial production and retail sales growth.

We did hear some continued M&A news of interest this week though. Tyson Foods (TYS) upped the ante to $63/share in its persistent quest for Hillshire Brands (HSH). Pharmaceutical giant Merck (MRK) has agreed to buy Idenix Pharmaceuticals (IDIX), a developer of drugs that fight hepatitis C, at $24.50/share totaling $3.85 billion, which is 3x its current market price. Finally, we also heard this week that Botox maker Allergan (AGN) rejected a higher $53 billion takeover bid by Valeant Pharmaceuticals International (VRX), saying that it still did not offer enough value.

Our 10 ETFs in the Spotlight slipped with 9 of them staying 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:

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:

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) retreated with the indexes but remain firmly entrenched on the bullish side of their respective trend lines:

Domestic TTI: +3.15% (last Friday +3.55%)

International TTI: +4.24% (last Friday +4.85%)

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 Jason:

Q: Ulli: Could you please clarify the difference between your M-Index and the momentum numbers as posted in your Monday Cutline reports? I find this information very valuable.

A: Jason: The M-Index is the ranking based on all momentum numbers and shows how funds/ETFs rank comparatively. The Cutline position numbers are simply showing the positions a fund/ETF has relative to its cutline or trend line.

For example, the first one above the yellow cutline has the position +1, the next one above it +2 and so on. The same applies below the cutline. As time goes on, you can quickly determine which funds are bouncing around the cutline and which ones are developing upside momentum by steadily climbing higher and developing positive momentum numbers.

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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/