Ulli... The ETF Bully

Stocks Edge Slightly Higher; Sysco To Buy US Foods

Ulli Monday, 9 December 2013, 4:23 PM Market Commentary Contact

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

Stocks ended slightly higher on Monday as investors awaited more clues from the Federal Reserve on whether the central bank will soon begin to wind down its economic stimulus. Perhaps the largest bit of news today was in the food industry where Sysco Corp announced it will buy US Foods Inc for about $3.5 billion from its private equity owners. This deal will combine the top two U.S. food distributors and create a company commanding at least a quarter of the $235 billion North American market.

The Nikkei is up nearly 51 pct year-to-date and is thus headed for its best yearly gain since 1972. The decrease in the Yen largely spurred the Nikkei’s climb today. Declines in the yen tend to boost sentiment towards Japanese equities because investors expect the weaker currency will inflate overseas earnings for exporters.

Markets looked better in Europe today as European shares edged up from the previous session with Chinese export data encouraging investors to anticipate stronger global growth. China’s exports handily beat forecasts in November and an unexpected drop in consumer inflation eased fears of any imminent policy tightening, helping to sustain a rally in global shares which had been fuelled by estimate-beating jobs data from the United States on Friday.

In ETFs, the top moving funds were the (AGA) PowerShares DB Agriculture Double Short, the (UGAZ) VelocityShares 3x Long Natural Gas ETN and (once again) the (NUGT) Direxion Daily Gold Miners Bull 3X Shares.

Our ETFs in the Spotlight edged up as well with two of them making new highs for the year:

ETFs/Mutual Funds On The Cutline – Updated Through 12/6/2013

Ulli Monday, 9 December 2013, 6:00 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 334 (last week 332) 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. 67 ETFs (last week 67) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 774 (last week 791) above the line and 76 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 Equity Rally Continue Next Year?

Ulli Sunday, 8 December 2013, 6:01 AM Market Review Contact

Friday was a fascinating day, because this was the day when the markets made up their mind that growth is good, said Jeff Korzenik, chief investment strategist at Fifth Third. But what is particularly interesting is that the markets are not afraid of the taper, as exemplified in the bond market today. This has a lot of implication for sector selection and where rates can go, which is the right call, Jeff noted.

Normally Treasury yields would not go higher if tapering is happening, irrespective of whether it is good or bad. Asked to comment on it, Jeff said tapering had relatively little impact on the bond market.

Clearly quantitative easing/asset purchases have continued even as Treasury net issuances have declined and that signifies supply and demand is not the dominating effect anymore. After decades in the bond market, supply and demand seem to be a tertiary factor. What’s really important is nominal GDP and the markets are trading-off of a 4-year average; bonds are going higher because there’s a growth in nominal GDP again. That being said, there’s unlikely to be runaway yields in the near term given the level of inflation so far, and the markets have finally figured that out, he observed.

New ETFs On The Block: Global X FTSE Portugal 20 ETF (PGAL)

Ulli Saturday, 7 December 2013, 6:03 AM Country ETFs Contact

Global X Funds, the New York-based issuer known for its focus on emerging markets and niche strategies, has introduced the first ever Portugal specific equity ETF listed in the US.

Some analysts believe the so-called PIIGS countries (Portugal, Ireland, Italy, Greece and Spain) in the 17 member currency zone have turned a corner and Portugal is at a point of inflection where Lisbon will be able to generate positive GDP growth in 2014, making valuations relatively cheap for this small European nation.

Also ETFs focused on the other members of the group, notably the iShares MSCI Spain Capped ETF (EWP), the iShares Italy Capped ETF (EWI) and the Global X FTSE Greece 20 ETF (GREK) have managed to outperform the markets with GREK rising more than 40 percent over the past twelve months.

12-06-2013

Ulli Friday, 6 December 2013, 4:06 PM Newsletter Archives Contact

ETF/No Load Fund Tracker Newsletter For Friday, December 6, 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/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-12052013/

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Market Commentary

Friday, December 6, 2013

MARKETS BACK ON TOP AFTER A SHAKY WEEK

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

It was just one day, yet there was ample meaning wrapped up in the connection that the 10-yr Treasury note (+3/32, 2.87%) and the stock market both pushed higher. Gold prices and the US Dollar Index, meanwhile, were little changed. This is a positive end to a somewhat sour week that saw the S&P and Dow both swim in the red daily.

The headlines for the employment data this week were reassuring on just about every front. Nonfarm payrolls increased by 203,000 (Briefing.com consensus 188,000) and were revised up for September (to 175,000 from 163,000) and down slightly for October (to 200,000 from 204,000). Nonfarm private payrolls increased by 196,000 (Briefing.com consensus 200,000). The unemployment rate fell to 7.0% from 7.3%

Bitcoin’s value took a tumble this week after the People’s Bank of China issued an official statement about its stance on the digital coin, knocking the cryptocurrency’s value down into the $800s after lofty $1,200 highs. China has been largely responsible for Bitcoin’s dramatic 500% rise in value over the last month, with yuan dominating the trading markets, according to the Genesis Block. China’s government evidently felt that the cryptocoin was getting too hot to ignore.

Our ETFs in the spotlight headed back up to close near their yearly highs:

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:

We are almost back to last week’s highs as the selloff was minor and did not affect the values in the all important “Off High” column by a significant amount.

3. Domestic Trend Tracking Indexes (TTIs)

Trend wise, our Trend Tracking Indexes (TTIs) slipped week over week despite today’s sharp rebound. They remain above their long term trend lines by the following percentages:

Domestic TTI: +4.34% (last Friday +5.07%)

International TTI: +5.96% (last Friday +7.93%)

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 Mike:

Q: Ulli: What is the difference between the “DD%” and the “trailing stop loss %”?

A: Mike: The DD% refers to the percentage a fund has come off its high. This is the high a fund has made since you purchased it, and it serves as a basis for calculating the trailing sell stop. For example, let’s assume you bought an ETF for $10 and it subsequently moves as follows for the next trading days: 10.05, 9.98, 10.15, 10.21, 10.30, 10.19, 10.14…

The high it has made in this data series is 10.30, which becomes the basis for calculating your 7.5% trailing sell stop, which would be at 9.52. If prices sink through 9.52, without taking out the high of 10.30 first, that would be your trigger point to exit the position.

In my weekly StatSheet listings, you can see the percentage a fund has come off its high in the DD% column. Once that number exceeds -7.5%, it means a sell signal for that fund has been generated. To be clear, if you bought this fund at a different time than shown in the StatSheet, you need to track your own highs (no pun intended) as mentioned above.

Hope this clarifies it.

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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/