7 ETF Model Portfolios You Can Use – Updated through 10/22/2013

Ulli Model ETF Portfolios Contact

Upward momentum shifted into overdrive based on the mere fact that the U.S. government is no longer shut down. Never mind that none of the real issues were resolved—the proverbial can has been merely kicked down the road again.

It did not matter to the markets, which simply took off with the S&P 500 gaining some 3.4% since last week’s ETF Model Portfolio report was issued.

We’re back to the same theme we’ve had all year in that mediocre news, like yesterday’s non-farm payroll report, are a good thing as it simply means that the overhanging “taper” may be postponed once again confirming that the economy is unable to organically grow on its own.

Be that as it may, there is a price to be paid at some point when market participants realize that this rally is supported by nothing than hot air. When the eventual turnaround occurs, it pays to be prepared via an exit strategy such as our sell stop discipline.

In the meantime, here’s the latest ETF Model Portfolio update:

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Ignoring Weakness In Jobs Data

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

U.S. equities finished higher, despite a softer-than-forecasted U.S. September nonfarm payroll report. The data may have solidified expectations that the Federal Reserve may hold off on tapering its asset purchases until signs of a healthy economy become more lucid.

Speculation pushed the annual advance in the Standard & Poor’s 500 Index within a percentage point of the best yearly gain in a decade. Treasuries finished solidly higher following the jobs report, overshadowing positive reads on construction spending and manufacturing activity in the Mid-Atlantic region. Gold was higher, while crude oil prices and the U.S. dollar lost ground.

Earnings reports continue to come in earnest, with mostly positive results. Netflix beat earnings expectations, as did Texas Instruments, but the chipmaker’s shares suffered after it issued disappointing 4Q guidance. Moreover, Dow member Travelers Companies bested the Street’s projections and authorized a $5 billion stock buyback plan, and Dow member DuPont reported upbeat earnings.

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Earnings In Focus Ahead Of Jobs Data

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

U.S. equities finished mixed and near the flatline in a choppy session, as investors await a week chock full of earnings and economic data, headlined by tomorrow’s release of the September nonfarm payroll report.

Meanwhile, the Dow was pressured by McDonald’s disappointing same-store sales and lackluster guidance which overshadowed its better-than-expected 3Q earnings. In other equity news, Dow member JPMorgan Chase & Co reportedly reached a $13 billion civil settlement with the U.S. government, fellow Dow component AT&T agreed to sell or lease 9,700 wireless towers to Crown Castle International for $4.85 billion in cash, RadioShack reportedly secured new financing, and Netflix posted better-than-expected 3Q results after the close.

Elsewhere, treasuries were lower following a decline in U.S. existing home sales, while gold and crude oil prices were lower, and the U.S. dollar was flat.

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ETFs/Mutual Funds On The Cutline – Updated Through 10/18/2013

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 342 (last week 327) 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. 75 ETFs (last week 69) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 818 (last week 800) above the line and 41 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: Do Economic Indicators Support Tapering Next Year?

Ulli Market Review Contact

92835431It’s not a matter of if the Fed will pull back, but a matter of when the Fed decides to pull back and taper QE, said Joseph Stanious, market strategist at JPMorgan Funds. Hoping for the tapering to start this year is probably not going to be correct as the Fed is yet to assess the damage that Washington caused to the economy but it may happen by early next year, by January the earliest under new Fed chief Janet Yellen.

The underlying indicators that the Fed has been watching all along such as job market strength and economic growth are all intact and support tapering, Joe said. The financial sector has been on a tear this past year, gaining more than 27 percent and really leading the S&P on some kind of rallies.

But the real worries are still mounting as the earnings-season progresses, with the quality of earnings coming under investors’ focus. Bank of America’s profits seem to have come from lower legal expenses rather than interest margins. Revenue from trading has also dropped, especially in the fixed-income segment with Goldman Sachs faring the worst since the financial crisis in 2008. Also, stagnant loan growth seems to be another problem for the banks.

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New ETFs On The Block: Flexshares STOXX Global Broad Infrastructure Index Fund (NFRA)

Ulli Infastructure ETFs Contact

123508402Infrastructure and natural resources have found favor with investors in recent years, and a flurry of funds have been issued to capitalize on the rapid development in emerging markets such as China, India and Brazil.

The prospect for this space looked very bright a few years ago after Brazil was awarded the 2014 Soccer World Cup and 2016 Olympics and India announced it will spend more than $1 trillion to build new infrastructures. The performance of this sector however, remained mixed with broad-based funds such as the iShares Global Infrastructure ETF (IGF) trading like defensive funds, and the emerging market funds exhibiting more volatility than their developed-market counterparts.

Nevertheless, infrastructure across many developed countries, including the US, needs to be upgraded and with the US Fed likely to continue with its loose monetary policy till growth picks up, firms in this niche are expected to remain busy for a long time.

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