Bouncing Off The Glass Ceiling

Ulli Market Commentary Contact

Wed pic

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

Clearly, the markets were taking a breather today, after the S&P’s attempt to pierce the 1,900 level, not just on an intra-day basis, did not materialize. While the benchmark had been trending sideways for this month, let’s not forget that it has been on a 4.5% rebound spree since its low on April 11.

Yesterday’s retails sales report showing a meager climb of 0.1% last month confirming what we have observed in our spotlight ETFs for some time; namely that consumer discretionaries (XLY) have been lagging the market all year and are not the place to be invested in.

Small-Caps have taken the brunt of the pullback with the Russell 2000 falling some 2.7% over the past 2 days, after having come off its March high by 8.7%, and also dropping below its widely followed 200-day moving average. It’s too early to tell if this is a harbinger of things to come, kind of like the proverbial canary in the coalmine. This where the long-term trends, along with trend line breaks, will be extremely helpful and eliminate the guessing game as to future market direction.

Our 10 ETFs in the Spotlight pulled back; no new highs were made, but 9 of them are remaining on the plus side YTD.

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Markets Continue Up, Except For Our Good Friend The Nasdaq; A Glance At Gold

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

The S&P 500 and the Dow both edged to new highs again today, while the Nasdaq resumed its oh too familiar slide. Cisco Systems Inc (CSCO), which is set to report its quarterly earnings results on Wednesday, was the biggest drag on the Nasdaq. The stock slid 1.4%.

It was a big day for coffee machine innovator Keurig Green Mountain (GMCR). The stock ended up 7.6% to $119.07 per share after Coca-Cola (KO), just three months after buying a 10% stake in Keurig, announced it increased its stake to 16%. Coke is now the largest shareholder in Keurig.

We saw a bit of disappointing economic news today. Retail sales grew only 0.1% in April, which disappointed forecasters, who expected more of an early spring pick-up. Economists’ had forecast a 0.5% gain.

It has been a while since we discussed gold here in our moving the markets segment, so let’s revisit. In short, gold has been hammered since its peak of $1,895 per ounce in September 2011. Today it’s down to $1,293 and experts say the meltdown could continue until gold hits $800 or less. Investors normally turn to gold when the world feels more dangerous. But despite recent troubles in the Ukraine, gold has continued to fall from a price of $1,385 in March. Just today, UBS lowered its one-month forecast to $1,250 from $1,280 an ounce and adjusted its three-month forecast from to $1,300 from $1,350 an ounce.

4 of our 10 ETFs in the Spotlight made new highs today while 9 of them remain on the plus side YTD.

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Markets Swing Back Into Positive Territory On Fruitful Monday

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

The stock market returned to record levels today as investors regained their appetite for riskier stocks.  All major indexes gained, as the intra day chart above shows. Internet stocks, which have taken quite a beating over the past month, pulled a turnaround, with Twitter (TWTR) and Facebook (FB) at  the top of the list of Nasdaq leaders.

Stocks also got a boost from some M&A news today. Pinnacle Foods Inc. (PF) shares jumped 13.2% today after we heard the announcement that they will be acquired by Hillshire Brands (HSH), a major retailer of meat and frozen bakery goods. Also, Pfizer (PFE) shares rose slightly after the company published a letter to a parliamentary committee in the United Kingdom arguing its case for its proposed $106 billion acquisition of AstraZeneca (AZN).

It was a good day in the international realm as well. European shares edged higher: London’s FTSE 100, Germany’s DAX and France’s CAC all gained on the day. China’s Shanghai Composite jumped 2.1%, however the Nikkei in Tokyo dropped 0.35%. Investors continue to keep a close eye on geopolitical developments in the Ukraine, but they seemed to shrug off Sunday’s vote in a region of eastern Ukraine that showed an overwhelming majority in favor of independence.

Our 10 ETFs in the Spotlight had a good as well with 4 of them making new highs while 9 of them are on the plus side YTD.

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ETFs/Mutual Funds On The Cutline – Updated Through 05/09/2014

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 360) 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 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 587 (last week 658) above the line and 262 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 Housing Likely To Lag Behind The Rest Of The Economy?

Ulli Market Review Contact

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Housing is not quite as important as the Fed sometimes seem to think, said Ian Shepherdson, Chief Economist at Pantheon Macroeconomics. The Fed seems to be as much obsessed with housing as much the labor market, but it’s not necessary for housing to keep charging upwards for the rest of the economy to grow.

It’s a relatively small share of GDP now in terms of housing construction, even when one adds in the retail stuff that’s related to housing. But it’s important to sentiment as everybody seems to be obsessed with house prices. The rebound in house values has drastically improved the personal sector’s balance sheet. The Fed is certainly very concerned about it in a way perhaps two or three months ago they weren’t; they were ready to dismiss it as something temporary. And now their worries are much deeper it seems, he noted.

Asked if housing could roll over as yields and interest rates move up, Ian answered in affirmative. Over the last year, the affordability index has declined sharply, marking the biggest drop in 30 years. If mortgage rates rise further as the rest of the economy picks up, then housing would be under further pressure. It’s kind of a paradox here that the stronger the economy gets, the more the market gets worried about the Fed raising rates, the higher 10-year yields will go and the higher the mortgage rates will go and potentially the weaker the housing market will get, he argued.

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New ETFs On The Block: EGShares Blue Chip ETF (BCHP)

Ulli Emerging Markets ETFs Contact

91551519Emerging Global Advisors, the New York-based issuer specializing in emerging market exchange traded funds, has unveiled a self-indexed fund that offers investors exposure to a basket of developed market companies with quality, substantial and growing revenue from emerging markets.

The EGShares Blue Chip ETF (BCHP) tracks the EGAI Developed Markets Blue Chip EM Access Index, an equally-weighted 30 stock index that measures the performance of multinationals domiciled in the US, Europe and other developed markets, buts get a large share of their revenues from emerging markets.

Since the US Fed’s announcement of tapering last year, emerging market ETFs saw massive capital outflows, as investors assumed a rate-hike announcement from the central bank will follow soon, which, in turn, would push up yields. Unfortunately, the yield-rise forecasts didn’t materialize as the US Fed repeatedly asserted slack in the economy, indicating a rate hike is nowhere on the horizon.

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