You Can’t Keep A Good Stock Index Down

Ulli Market Commentary Contact

Wed pic

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

Well, stocks came roaring back today after a solemn Tuesday. The S&P 500 once again closed in record territoryas the chart above shows. The service sector was a leading gainer, as we received a report that showed U.S. service firms grew more quickly as production, hiring and new orders increased. All are interpreted as signs that the economy is accelerating after dipping at the start of the year.

Among the day’s biggest gainers were U.S. solar companies after the United States slapped new import duties on solar panels and other related products from China in a preliminary determination. First Solar (FSLR) rose 3.9% to $65.39.

While markets keep trending up, looking at some other economic numbers might keep our heads a bit more in check. The U.S. trade deficit ($47.2 bil) widened to its highest in almost two years in April as imported goods set a record; U.S. productivity declined even more rapidly than believed in the first quarter as extreme winter weather made businesses far less efficient. The path to forge ahead shall continue to be an uphill battle, needless to say, with the hope being that the GDP growth number hovers around that 2.2% mark.

Our 10 ETFs in the Spotlight improved with 5 of them making new highs today while 9 of them remain on the plus side YTD.

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Equities End Winning Streak; Gold Closes Higher

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

Stocks pulled back a tad, snapping a record breaking streak since last Friday. All major indexes gave back some of their recent gains. Although we saw a drop today, markets have been trending up over the past two weeks.

M&A activity regained their share of headlines, especially the recent Hillshire-Jimmy Dean-Tyson Foods-Pilgrim’s Pride bidding war. Today, Pilgrim’s Pride upped their bid for Hillshire by topping Tyson’s bid of $50/share by $10 to $60/share. Hillshire’s stock reacted positively gaining 9.5% to $58.65, while Pilgrim’s shares fell 2.2% to $25.34.

Well, I was bashing gold yesterday and, of course, as irony would have it the precious metal rose for the first time in six days today. Gold is a common safe haven that often moves in the opposite direction of general stock market trends and that was the case today it seemed as markets dropped. One good day doesn’t cover up the long term trend, which analysts still predict to be an uphill battle, especially given the uncertainties of Thursday’s ECB policy meeting and a big decline in interest rates in the futures market.

Our 10 ETFs in the Spotlight stayed pretty much even; however, 1 of them made a new high today while 9 of them remain on the plus side YTD.

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Apple Fails To Impress; S&P And Dow Continue Marching Forward

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

The S&P 500 and Dow both kept moving forward to new record highs today, while the Nasdaq limped to the finish line to close in the red. The S&P 500 realized its 15th record close of 2014, and the Dow posted its 6th record close of the year.

There was a folly in the Manufacturing Index released by the Institute for Supply Management that caused a slight shock in the Dow. The index reported an unexpected drop to 53.2 in May, but actually had improved to 55.4, up from 54.9. The correction shortly thereafter eased sudden concerns about the economy and the Dow climbed back up accordingly.

While the S&P and Dow kept trending upwards, things were not so fruitful for the Nasdaq today. Big names like Amazon (AMZN), Biogen (BIIB), Google (GOOG) and Tesla (TSLA) all were a drag on the index. Even Apple (AAPL), after unveiling new operating systems for their computers, phones and tablets, couldn’t impress investors enough to post gains on the day. The stock fell $4.35 to $628.65.

Meanwhile, gold prices still continues to trend downwards, dropping 0.2% to $1,243/oz. The metal has been slowly moving away from its 2014 high of almost $1,400/oz. and has not shown any apparent signs of regaining momentum.

Our 10 ETFs in the Spotlight went predominantly sideways; however, 4 of them made new highs today while 9 of them remain on the plus side YTD.

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ETFs/Mutual Funds On The Cutline – Updated Through 05/30/2014

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 362 (last week 359) 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 Be Extraordinarily Aggressive?

Ulli Market Review Contact

92835431There are a series of factors that are driving the current rally in the US bond markets though the main one that has been apparent for a long time and driving the market is the incredible amount of liquidity, said Rick Reider, co-head of America’s fixed income at BlackRock Inc.

Some of the reasons include a rush to safety due to geopolitical tensions in Russia and the Fed advancing gradually with tightening, because America’s economic data points are going to improve slowly. However, the most significant reason is, and investors often tend to miss it, the yield difference between US Treasuries and German and Japanese 10-year govt. bonds. US Treasuries at about 2.5 percent look attractive compared with Germany’s 1.4 percent or Japan’s 1.6 percent. Given the amount of liquidity in the market, owning some duration is actually good, he explained.

Asked how long the relative value could persist, Rick said the dynamic currently at play is not only extraordinary, but truly historic. There is a situation where European Central Bank President Mario Draghi is going to be extraordinarily aggressive, which is going to drive into bond yield spreads; and then there is an aggressive Bank of Japan which could potentially be more aggressive going forward. As long as those stimuli are in place, Treasuries could drift higher and the yield volatility could be profound, he said.

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New ETFs On The Block: First Trust Managed Municipal Bond ETF (FMB)

Ulli Municipal ETFs Contact

137430914The ride for all sorts of long-duration bonds and bond ETFs turned bumpy in mid 2013 after the former Fed Chairman Ben Bernanke announced the central bank would begin to taper its long-running quantitative easing program towards the end of the year.

Poor fiscal health management in many municipalities made the situation worse for Munis.The situation for the almost $3.7 trillion municipal market, however, took a turn for the better this year on rising tax concerns, muted performance of equity markets and improving health of many municipal bond issuers.

First Trust, the Wheaton, Illinois-based eighth-largest US provider of exchange-traded funds, unveiled an actively managed municipal bond ETF to tap into this opportunity. The First Trust Managed Municipal ETF (FMB) seeks to generate current income that is exempt from regular federal income taxes and attempts to offer long-term capital appreciation by investing in a portfolio of primary investment grade municipal bonds while offering daily liquidity and total transparency of prices.

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