Stocks Back On Track; Is Apple Hip Enough To Sport Beats By Dre?

Ulli Market Commentary Contact

Thur pic

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

Stocks were back on track today, with the S&P breaking back through record territory and the Dow approaching historical highs. The Dow is now within a scant 17 points of its all-time closing high of 16,715.44.

It was all about recent economic updates we received today. The latest economic data that came in showed a drop in jobless claims to a rate near that of 2007. However, we also received the revised GDP numbers today that showed the economy contracted in Q1 by a bit more than was originally reported. This was no surprise though given the harsh winter that slowed business down across the east coast.

Corporate deals, from pharma to sausages, still remain at the forefront of market news and we were hit with another one today. We received news that Apple (AAPL) intends to buy the mainstream headphone giant Beats Headphones for $3 bil. Apple has never been a contender when it comes to the headphone market, so the bid for Beats could provide new avenues for revenue as the company succumbs to more and more competition in the computer/tablet/phone world. Apple’s stock was up 1.82% on the day.

Our 10 ETFs in the Spotlight rallied with 7 of them making new highs; 9 of them remain on the plus side YTD.

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Stocks Pull Back; Revised GDP Numbers On Deck

Ulli Market Commentary Contact

Wed pic

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

Stocks pulled back today and decided to take a breather after hitting record highs during the previous two trading days. The S&P 500 closed out the day slightly down with the Dow and Nasdaq also ending in negative territory.

Amongst the movers and shakers today was Toll Brothers Inc. (TOL) Toll Brothers Inc., which gained on a strong U.S. housing report and the news that the builder doubled its Q2 profit. Qihoo 360 Technology Co. (QIHU), the Chinese internet security company, jumped up 5% today after releasing numbers that topped analyst expectations, as well as a strong financial forecast.

Retail shoe giant DSW Inc. (DSW) suffered a massive drop in price today ($8.90) to $23.62 after releasing some appalling Q1 numbers alongside an even worse forecast for the next quarter.

On the economic front, investors are awaiting the government’s revised estimate of first-quarter economic growth, which will be released tomorrow. Economists expect the report to show that the nation’s GDP fell by about half a percentage point at an annual rate the first three months of 2014. Many continue to believe that unusually harsh weather is responsible for much of the first quarter’s weakness. Was it that cold?

Our 10 ETFs in the Spotlight went nowhere but 1 of them made a new high despite the sideways pattern; 9 of them remain on the plus side YTD.

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Markets Well-Rested After Holiday Weekend

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

Apparently, investors and traders across the board were well rested when the markets re-opened today, because the major indexes roared all day and the S&P 500 advanced to close at a record high for the second trading day. The Dow gained 0.42% and the Nasdaq rose 1.22% on the day. The large gains on the day were mostly attributed to positive M&A activity, as well as a more entrenched hint that the European Central Bank will be lowering interest rates in the near future.

Hillshire Brands (HSH) has been in the news recently as a potential acquirer of Pinnacle Foods (PF) for $4.2bil. However, there is always a bigger fish in the sea and today the hunter became the hunted after we received a report that Pilgrim’s Pride (PPC) is offering to buy Hillshire for $6.4bil. Investors reacted extremely positive to this news and shares of Hillshire gained more than 22% to $45.19. Obviously, Hillshire needs to think long and hard which route it will take.

We also heard from Mario Draghi (ECB President). He believes pre-emptive action, such as a rate cut or quantitative easing, may be needed to tackle any risk of deflation. He also noted that the ECB is preparing a package of policy options for its June meeting, including cuts in all its interest rates as well as targeted measures aimed at boosting lending to small- and mid-sized firms.

Our 10 ETFs in the Spotlight joined the index rally with 3 of them making news highs; 9 of them remain on the plus side YTD.

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ETFs/Mutual Funds On The Cutline – Updated Through 05/23/2014

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 359 (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. 82 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 625 (last week 591) above the line and 224 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: Will The European Central Bank Initiate Quantitative Easing In June?

Ulli Market Review Contact

92835431The Purchasing Managers Index numbers in the 18-member euro zone were disappointing but were equally consistent with an annual growth forecast of about 1.5 percent, which, if achieved, would be great in what has been witnessed in the euro land generally, said James Bevan, Chief Investment Officer at CCLA Investment Management.

It is likely that the euro-area will witness a sustained pick-up in growth in the second half of the year, and it’s absolutely safe to say a second-quarter bad news is now “baked in the cake” and acceleration is on the curve, he added.

Asked why his portfolio is overweight on equities and underweight on fixed-income, James said investors need to understand first why fixed income has done so well this year. Growth in the currency-bloc has been disappointing in the first quarter and they are likely to be disappointing again in the second quarter. The real issue, however, is whether yields in the bond market are below the rates of inflation. On that basis investors are simply burning money by staying in the fixed-income asset class.

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New ETFs On The Block: iShares Qatar (QAT) And United Arab Emirates ETFs (UAE)

Ulli International ETFs Contact

91551519The Middle East has often been ignored by exchange traded fund issuers of the world though the region gained in economic prominence with the surfacing of the so-called Frontier Markets.

Among the frontier markets, Qatar and United Arab Emirates have been outperforming, and the international investor community was quick to recognize their emergence. Also, Qatar’s winning the hosting rights of the soccer World Cup in 2022 underscores the region’s growing importance beyond just oil and gas.

Before Qatar and the UAE officially get promoted to emerging markets from frontier markets by Morgan Stanley on May 30, iShares, the world’s largest issuer of ETFs and an arm of BlackRock, launched two funds focused on the two fast-growing Middle East equity markets. The iShares MSCI Qatar Capped ETF (QAT) and the iShares MSCI UAE Capped ETF (UAE) were launched weeks before the promotion of these two OPEC members to EM category.

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