Ulli... The ETF Bully

Major Indexes Continue To Rally; Dollar Expected To Appreciate In 2014

Ulli Monday, 23 December 2013, 3:44 PM Market Commentary Contact

[Chart courtesy of MarketWatch.com]

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

Ulli Monday, 23 December 2013, 6:02 AM 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 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:

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: Have The Markets Turned Complacent?

Ulli Sunday, 22 December 2013, 6:03 AM Market Review Contact

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)

Ulli Saturday, 21 December 2013, 6:01 AM Bond ETFs, Emerging Markets ETFs Contact

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.

12-20-2013

Ulli Friday, 20 December 2013, 4:29 PM Newsletter Archives Contact

ETF/No Load Fund Tracker Newsletter For Friday, December 20, 2013

ETF/No Load Fund Tracker StatSheet

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

https://theetfbully.com/2013/12/10644/

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Market Commentary

Friday, December 20, 2013

OVERALL, INVESTORS SATISFIED WITH FOMC DECISION

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

An eventful week has come to its end, and the markets are rather satisfied with the FOMC decision to modestly start tapering its monthly bond purchases by January 2014. The US dollar was stronger across the board, while the price action is smooth despite lower liquidities before the year-end holidays. The 10-year US treasuries stepped up to 2.92% – 2.95% range in New York yesterday, while the tension in emerging markets rises alongside with the higher US yields.

Bitcoin got slammed this week. No surprise there. It is in competition with the U.S. dollar, Yuan and the Euro. What is a surprise is the revelation on Bloomberg that the London Gold vaults are “virtually empty.” Where’s the gold now? China. There really is a finite amount of gold.

The Fed’s tapering decision is going over well in Europe exchange traded funds, with European stocks gaining for the third consecutive day and moving on their best weekly performance since April. The Vanguard FTSE Europe ETF (VGK) is up 1.9% since the Fed announcement Wednesday.

Half of our ETFs in the spotlight made new highs today, the other half has pulled back slightly.

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, none of them ever 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:

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:

3. Domestic Trend Tracking Indexes (TTIs)

Looking at the big picture, our Trend Tracking Indexes (TTIs) advanced with the overall positive tone in the market and remain above their long term trend lines by the following percentages:

Domestic TTI: +4.31% (last Friday +3.31%)

International TTI: +5.95% (last Friday +4.45%)

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 Jack:

Q: Ulli: I like your new format the daily market commentary.
Will you continue showing these ETFs in the spotlight new year?

A: Jack: Yes, I will update these 10 ETFs every day along with a continuation of their “High” points and 2014 YTD figures in a newly added “Change” column.

Keep in mind that a new year does not change any of the calculations in regards to determining the trailing sell stop points. Of course, I need to point out that you may have different “High” points depending on your purchase date of the ETFs.

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WOULD YOU LIKE TO HAVE YOUR INVESTMENTS PROFESSIONALLY MANAGED?

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/