Nasdaq Conquers 4,000; Gold-Mining ETFs Slip

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

Stocks ended in the green, but just barely as traders took profits ahead of the holiday.  The Nasdaq composite index closed above 4,000 on Tuesday for the first time since 2000, while the Dow and S&P ended barely changed.  Retailers and homebuilders were among the best performing sectors, responding to stronger-than-expected earnings and robust housing market data.  Given the steady and solid performance of the stock market over the past couple of months, perhaps the take away here is that the whole partial government shutdown thing was a real non-event.  Trading is still expected to remain light this week, with financial markets closed Thursday for the Thanksgiving holiday.

Internationally, European stocks dipped on Tuesday, as corporate profit warnings and lower-than-expected U.S. consumer confidence data kept benchmark indexes in ranges that were set earlier this month. With Europe’s earnings season drawing to an end, results have been disappointing. About half of companies missed profit forecasts and nearly two-thirds have missed revenue forecasts, according to data from Thomson Reuters StarMine.

Gold was all the roar in the ETF world today. We saw major gold-mining ETFs lose ground as the industry’s tango with the Federal Reserve continues. Concerns over the much-anticipated tapering (of quantitative easing) continue to keep downward pressure on gold prices, with the spot price off nearly 0.75 percent on Tuesday. Keep an eye out for the effects of the anticipated tapering on commodities such as gold in the weeks to come.

Here is the latest update of our ETFs in the Spotlight:

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Mixed Emotions

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

The major indexes appeared to meander aimlessly with the Dow and Nasdaq edging slightly higher while the S&P 500 dropped late in the session to post a minor loss.

After breaking major milestones last week, the market looked a little tired as volume slowed down during this Holiday shortened week, which can easily exaggerate directional moves. The weekend deal between six global powers and Iran, to curb Teheran’s nuclear program had, while making headlines news, only a limited market effect as details still remain sketchy.

One immediate effect was a drop in oil prices which, should they last, will have a positive economic effect. Most of our ETFs in the spotlight came off their highs by a small margin, while two of them made new highs.

Let’s take a look:

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ETFs/Mutual Funds On The Cutline – Updated Through 11/22/2013

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 340 (last week 339) 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. 71 ETFs (last week 71) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 794 (last week 799) above the line and 56 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: How Many European Banks May Fail ECB’s Stress Test?

Ulli Market Review Contact

92835431Germany will lead the recovery within the core eurozone in 2014 while Spain will lead the recovery in the periphery, said Alberto Gallo, head of macro credit research at the Royal Bank of Scotland. The Eurozone faces deflation risk today because there has been too much austerity (government spending cuts) and bank deleveraging.

Germany has already provided extra support to Portugal, Greece and Ireland, and is likely to continue doing so in 2014. The European Central Bank is likely to slow down the deleveraging process next year, which in turn, will help banks to heal. That will solve the disinflation problem and will make the recovery durable.

However, the pace of recovery will not be equal across the currency bloc as countries like France and Italy have fallen behind on economic reforms while Spain has zoomed ahead, said Alberto.

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New ETFs On The Block: Db X-Trackers Harvest CSI 300 China A-Shares Fund (ASHR)

Ulli China ETFs Contact

101768508Global markets’ interest in Chinese equities received a major boost after the nation’s new leadership announced sweeping social and economic reforms last week.

Coincidentally, Deutsche Asset & Wealth Management, the asset management arm of Germany’s largest lender, launched a unique China-focused exchange-traded fund on Nov 6 offering US investors direct access to the stocks of the world’s second largest economy.

The db X-trackers Harvest CSI 300 China A-Shares Fund (ASHR) seems to have caught the fancy of investors as it debuted with $108 million in assets, the highest for any ETF since 2007. Total assets under management since jumped to more than $146 million with daily trading volume hitting the 1 million mark on Nov 19.

People familiar with investing in China know it’s difficult for foreigners to access the nation’s lucrative equity market as they must obtain the status of a Qualified Foreign Institutional Investor (QFII) first. Exposure to China A-Shares is restricted mostly to domestic investors and is quoted in Chinese renminbi.

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11-22-2013

Ulli Newsletter Archives Contact

ETF/No Load Fund Tracker Newsletter For Friday, November 22, 2013

ETF/No Load Fund Tracker StatSheet

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

https://theetfbully.com/2013/11/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-11212013/

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Market Commentary

Friday, November 22, 2013

S&P 500 GAINS SEVEN OUT OF SEVEN

Fri pic

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

Seven was a lucky number at least for the S&P 500 index, which managed to rack up gains seven weeks in a row. As the weekly chart above shows, the mid-week dip proved to be another buying opportunity with the index now closing above the 1,800 milestone for the first time, while the Dow frolicked again above the 16,000 level.

Providing ammunition for the continued upward move were increased pace of hiring as well as favorable decisions by European regulators regarding drug makers, which pushed up healthcare stocks with one of our spotlight ETFs (XLV) gaining 1.34% for the day.

News on potential tapering was noticeably absent today, which appears to be the one fly in the ointment that can derail this market at anytime. However, right now the direction continues to be the path of least resistance, which is higher.

Our ETFs in the spotlight confirm this trend, so let’s take a look:

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, all of them never 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:

MaxDD

All of them are in “buy” mode meaning their prices are above their respective long term trend lines by the percentage indicated (%M/A).

Now let’s look at the MaxDD% column and review the ETF with the lowest drawdown as an example. As you can see, that would be XLY with the lowest MaxDD% number of -5.73%, which occurred on 11/15/2012.

The recent sell off in the month of June did not affect XLY at all as its “worst” MaxDD% of -5.73% still stands since the November 2012 sell off.

A quick glance at the last column showing the date of occurrences confirms that five of these ETFs had their worst drawdown in November 2012, while the other five were affected by the June 2013 swoon, however, none of them dipped below their -7.5% sell stop.

Year to date, here’s how the above candidates have fared so far:

YTD

With the positive tone in the market having returned, most ETFs have made new highs represented by the 0.00% value in the “Off High” column.

3. Domestic Trend Tracking Indexes (TTIs)

Trend wise, our Trend Tracking Indexes (TTIs) rallied with the markets and remain above their long term trend lines by the following percentages:

Domestic TTI: +4.77% (last week +4.79%)

International TTI: +7.42% (last week +7.59%)

Have a great week.

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 Franz:

Q: Ulli: Why is the 39 week SMA used in Trend Tracking? If I missed that discussion please excuse. Thank you.

A: Franz: When I developed the Trend Tracking Indexes back in the 1980s, I experimented with various SMAs but decided that the 39 week SMA was most appropriate. Subsequently, I never found a valid reason to change that.

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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/