Syria Tensions Take Down Stocks

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

Major Index ETFs suffered the worst day since June slumping in a broad decline as geopolitical concerns over a possible US-led military response against Syria worsened, overshadowing data showing an unexpected improvement in Consumer Confidence, a rise in housing prices, and a jump in regional manufacturing activity.

The S&P 500 closed below its 100-day moving average, a sign of weak short-term momentum. The day’s fall extends recent losses on uncertainty over when the U.S. Federal Reserve will start to slow its monetary policies. Retreats of the major averages sent the CBOE Volatility Index to its highest level since early July as investors scrambled to buy protection.

Crude oil and gold prices moved solidly higher in the midst of the geopolitical unease, and Treasuries gained ground. Concerns over possible supply interruptions helped crude oil end at its highest level in more than a year, climbing 2.8% to $108.84 per barrel. While most cyclical sectors ended behind the broader market, the energy space outperformed with a loss of 0.6% as the surge in crude contributed to the sector’s strength.

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Stocks Dive After Kerry Blasts Syria

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

After spending most of the day in positive territory, U.S. equities lost steam in the final hour of trading to end mostly lower, halting two days of gains, after U.S. Secretary of State John Kerry called Syria’s use of chemical weapons “undeniable.”

Once again, a larger-than-expected decline in July’s durable goods orders report did little to sooth anxiety that asset tapering by the Federal Reserve may begin soon. The major averages held modest gains into the final hour of the session when comments from Secretary of State John Kerry regarding the situation in Syria contributed to broad-based selling.

Kerry told reporters that Syrian President Bashar al-Assad’s regime was responsible for last week’s attack that the opposition blames for more than 1,300 deaths. The S&P 500 spiked lower following the statements after earlier extending its first weekly gain since Aug. 2. The comments injected a bit of uncertainty and the CBOE Volatility Index jumped to a session high as downside protection received an afternoon surge in interest.

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ETFs/Mutual Funds On The Cutline – Updated Through 8/23/2013

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 300 (last week 303) 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. 54 ETFs (last week 55) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 779 (last week 779) above the line and 80 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: Could The Fed Increase Asset Purchases To Bring Down Yields?

Ulli Market Review Contact

92835431Following the release of the Fed’s latest FOMC minutes, the bond markets have witnessed violent movements with prices plummeting and yields shooting up. People have pressed the panic button a little too early and may have jumped too far, feels David Blanchflower, economics professor at the Dartmouth College and a former policy maker at the Bank of England.

If the Fed was ready to start tapering, they would have gone ahead and announced that in the last meeting. The Fed’s move will be “path dependent” and the policymakers are going to wait and see. It’s unlikely the taper issue will be resolved by the September meeting, given the way the minutes read.

Taper is surely going to come, but the big question is when? Also, it’s not clear which of the assets the Fed would stop buying, i.e. the mortgage-backed securities (MBS), Treasuries or bonds, Dave observed.

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New ETFs On The Block: iShares Dow Jones-UBS Roll Select Commodity Index ETF (CMDT)

Ulli Commodity ETFs Contact

98396691iShares, the exchange-traded products issuer arm of BlackRock Inc that is best known for its equity and fixed-income products, has unveiled a commodities-focused product after a long hiatus.

The iShares Dow Jones-UBS Roll Select Commodity Index Trust (CMDT) is the firm’s first commodity-based fund launch since 2006 and may be suitable for investors who are seeking exposure in the materials sector as the recovery gathers steam. The firm is the world’s largest provider of ETFs with the total number of products approaching 300; a raft of new launches focused on corporate bonds and equity-factors in the second and third quarter.

CMDT is designed to provide exposure to a broad basket of commodity futures but looks to go beyond methodologies employed by some of the original funds in the commodity space. It seeks to diminish the negative effects of contango and amplify the benefits of backwardation while selecting commodities-futures contracts.

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08-23-2013

Ulli Newsletter Archives Contact

ETF/No Load Fund Tracker Newsletter For Friday, August 23, 2013

ETF/No Load Fund Tracker StatSheet

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

https://theetfbully.com/2013/08/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-08222013/

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Market Commentary

Friday, August 23, 2013

BULLS ADVANCE DESPITE HOUSING SALES SLUMP

Domestic equity markets were able to hold onto gains and close Friday’s trading session higher, as investors weighed how a sharp decline in U.S. new home sales may affect the Federal Reserve’s decision on when to scale back its stimulus efforts.

The Standard & Poor’s 500 Index posting its first two-day rally in three weeks, climbing 0.4 percent to 1,663.47. The Dow Jones Industrial Average rose 46.62 points, or 0.3 percent, to 15,010.36, and the Nasdaq Composite added 19 points (0.5%) to 3,658.

On the equity front, shares of Dow member Microsoft posted their largest daily percentage gain in more than four years after the company announced that its long time CEO Steve Ballmer will be retiring within the next 12 months. On the only big economics report of the day, new home sales slumped 13.4% in July to a 394,000 annual rate on top of large downward revisions to the prior three months totaling 69,000, a huge disappointment and breaking an uptrend line in the process.

It was the biggest one-month drop since May 2010. Economists were expecting a slight 1.4% decline to a 490,000 unit annual rate. Sales fell in all four regions. On a y/y basis, sales fell to 6.8%, the slowest growth since December 2011. Price increases have slowed as well, falling to the 10% to 12% range from a peak of 15% at the beginning of the year. Even so, new homes are quite expensive relative to income. Higher mortgage rates, higher prices, and low availability appear to be crimping sales. Home builders tumbled in reaction to the data.

This weighed on the discretionary sector, which ended with a razor-thin gain of 0.02%. Recent weeks have entertained much discussion over when the Federal Reserve will begin cutting back the pace of its asset purchases. While comments from many Fed speakers have suggested the first taper may occur as early as September, today’s new home sales report speaks against tapering in the immediate term. For the week, the S&P added 0.3%, Nasdaq rose 1.4%, and the Dow shed 0.6%.

Our Trend Tracking Indexes (TTIs) recovered from last week’s drubbing and closed the past five trading days as follows:

Domestic TTI: +1.85% (last week +1.67%)

International TTI: +5.18% (last week +5.86%)

Have a great week.

Ulli…

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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 Robert:

Q: Ulli: I am a US Government employee with my retirement funds in the governments Thrift Savings Plan. As I’m sure you know our plan enables us to invest in an international fund which tracks the EAFE.

With Europe beginning to get back on its feet, coupled with China, do you believe I would get more return with the international fund than investing in a fund which tracks the S&P 500.The international fund is lagging behind for the year so far but would it be a good bet going forward? Thanks for your attention…I faithfully read all of your market commentaries and look forward to next week.

A: Robert: You could go that route as long as you use my recommended sell stop discipline to protect or limit the downside risk.

While a couple of data points have indeed been positive, long-term, I think Europe will be a disaster.

Right now, appearances are everything as the German elections loom in September. There is nothing positive in any of the countries like Spain, Italy, Portugal and even France, which are basically insolvent.

I still think the U.S. is least dirty shirt in the basket, so my investment theme for this year has been domestic, and I don’t see any good argument to change that. Of course, all my thinking will change once the domestic trend line crosses into bear market territory.

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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/