Hope your Holiday season is fun, festive and full of compassion, tolerance, peace and happiness.
Ulli…
SPY And DIA Head Into Record Territory
1. Moving The Markets
The Christmas rally continued today with the Dow and S&P 500 eking out another record close during this Holiday-shortened session caused by a positive durable goods orders report. Big ticket items (aircraft and transportation equipment) rose 3.5% vs. an expected 2%.
Home prices gained 8.2% in October from the same month last year, while they edged up 0.5% from September. Surprisingly, so far rising mortgage rates have not yet put a lid on single-family home sales.
Historically, December has been a good month for stocks and, so far, this year appears to be no exception. With traders now having received some clarity from the Fed in regards to tapering, we may see this current momentum carry into next year. Of course, there are always unintended consequences, which could spoil the best made plans. That is why we have our trailing sell stops indentified and ready to be executed should the need arise.
To no surprise, seven out of our ten ETFs in the Spotlight made new highs today; the other three are very close as the second table below shows.
Major Indexes Continue To Rally; Dollar Expected To Appreciate In 2014
1. Moving The Markets
U.S. stocks climbed on Monday, with the Dow industrials and S&P 500 again closing at records, as Apple and Facebook led a rally in the technology sector and after data showed consumer sentiment at a five-month high and spending up in November. Facebook jumped as the social-networking site’s first day of trading as one of the S&P 500 companies. Shares of Apple gained after it reached a deal to sell its iPhones through China Mobile, the biggest phone company on the globe.
The dollar lost ground against the currencies of major U.S. trading partners while the yield on the 10-year Treasury note used in figuring mortgage rates and other consumer loans rose 4 basis points to 2.93 percent.
This month WisdomTree is back with its latest launch of The WisdomTree Bloomberg U.S. Dollar Bullish Fund (USDU), which seeks to provide exposure to the U.S. dollar against a broad basket of developed and emerging market currencies. The timing of this launch seems to be perfect, given that Fed will eventually begin its taper program in early 2014.
The Fed’s decision has finally revived hopes for the U.S. dollar. Investors who had unwound their long positions in the dollar after a prior No Taper from the Fed are considering adding long positions now. Although the dollar lost ground today, it is expected to rise going into the New Year against major currencies.
Eight out of our ten ETFs in the Spotlight made new highs today; the other two are hovering within striking distance.
ETFs/Mutual Funds On The Cutline – Updated Through 12/20/2013
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 304 (last week 320) 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 93 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. 60 ETFs (last week 65) have managed to remain in bullish territory after the recent market volatility.
The third report covers Mutual Funds on the Cutline. There are currently 697 (last week 719) above the line and 153 below it out of the 859 that I follow.
Take a look:
2. ETF High Volume 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: Have The Markets Turned Complacent?
Equities have rallied 27 percent this year and that’s the cost of being bearish, though it is quite high, quipped Dean Curnutt, President and CEO of Macro Risk Advisors, when asked to comment on the distinctive feature of 2013 and the sudden market calm witnessed as of late.
To be relevant and to manage money these days, it’s hard not to be bullish, he added. The Volatility Index (VIX) chart that measures volatility on the greater 500 stocks of the S&P 500 index shows a reading of 20, indicating the situation is normal.
Asked if investors should be scared of the market calm in the US and other emerging markets such as Turkey, Indonesia and China, Dean said history shows that despite experiencing periods of market-crisis over and over again, investors tend to forget them easily.
New ETFs On The Block: Proshares Short Term USD Emerging Markets Bond ETF (EMSH)
ProShares, the Bethesda, MD-based sponsor of exchange-traded funds best known for its leveraged and inverse funds, has launched the ProShares Short Term USD Emerging Markets Bond ETF (EMSH). The firm is the nation’s largest provider of alternative ETFs with more than 140 products and has been attempting to expand its footprint in the regular unleveraged ETF segment as of late.
EMSH is the first short-term dollar-denominated emerging markets bond ETF to be launched in the US. The fund aims to reduce price volatilities arising out of interest rate changes and offers attractive yield potential for investors worried about rising interest rates.
The fund tracks the DBIQ Short Duration Emerging Market Bond Index, a benchmark developed by Deutsche Bank that includes a diversified portfolio of US dollar-denominated emerging market bonds with a dollar-weighted average maturity of three years or less. The debt issuers include sovereign governments, non-sovereign government agencies and corporations with sizable government ownership; i.e. the so-called quasi-sovereigns.