Week Starts off on Fourth Straight Loss

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

The above picture is worth a thousand words. U.S. equity markets closed in negative territory for the fourth-straight session to start the week off on a sour note, after energy shares dropped and Treasury yields again jumped to a two-year high.

Today marked the first occurrence of a 4-day losing streak for both the S&P 500 Index and Dow this year. The Nasdaq was positive for most of the session, spurred by gains in technology shares, such as Apple and Google, before selling pressure in the last hour of trading turned the index negative. Investors are eagerly awaiting the mid-week release of the minutes from the most recent Federal Open Market Committee meeting.

While today’s economic calendar did not provide anything for traders to mull, the rest of the week will offer some insight into the health of the economy, headlined by the minutes from the Fed, likely keeping the timing and pace of Fed tapering and the prospect for rising interest rates in the bond market on center stage.

Some analysts believe the economy appears on the rebound, but neither hot enough to force the Fed’s hand nor cold enough to engender recession fears. However, given elevated market sentiment, seasonal tendencies and some technical deterioration within the stock market, many believe the market has become vulnerable to a pullback.

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ETFs/Mutual Funds On The Cutline – Updated Through 8/16/2013

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 303 (last week 302) 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. 55 ETFs (last week 56) 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 790) 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.

One Man’s Opinion: Is A Continuation Of The Stock Market Rally Linked To Fed Stimulus?

Ulli Market Review Contact

92835431When the S&P 500 first hit the 1,700 mark, it was evident the market is going to enter a trade range for the rest of the year, says Jim Paulsen, chief investment strategist at Wells Capital Management.

The market is going to digest three really big things now. First, will be digesting the big move it already had since last fall. There had been a 3x multiple increase (since last fall) in prices, the biggest multiple increase in this recovery in stocks, and the markets are kind of adjusting to higher valuations.

Secondly, the markets had to adjust to a significant reprising in long-term interest rates, which is still in progress and is likely to go to three percent or a little more by the year-end. Finally, the markets have to digest tapering, which is going to start by the end of this year. However, none of these events are likely to end the bull market, but investors are going to get frustrated for the next several months, maybe the rest of this year before they regain some confidence in 2014, Jim said.

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New ETFs On The Block: Global X MLP & Energy Infrastructure ETF (MLPX)

Ulli Master Limited Partnerhips Contact

139868600Global X Funds, the New York-based issuer of exchange-traded funds has launched a master limited partnership or MLP product that seeks to take the tax-bite away generally associated with the C-corporation structure. The Global X MLP and Energy Infrastructure fund (MLPX) is designed as a Regulated Investment Company and is suitable for investors seeking to maximize capital appreciation and tax-deferred income.

This is the third MLP product from the fund group and scores over its April 2012 launch, the Global X MLP ETF (MLPA), since MLPA is structured as a C-Corp fund. Deferred tax liabilities impact the returns of C-Corp funds, resulting in much higher expenses for investors.

As the economy allegedly starts to look up, newer pipeline and midstream firms are likely to use this corporate structure to take advantage of the tax savings, given the rising demand for energy. Further benefit is expected to accrue from the industry’s toll-road business model as revenues are directly correlated with volume transported as opposed to commodity prices. Also, a report by the International Energy Agency forecasts the US will become the largest exporter of oil by 2017.

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08-16-2013

Ulli Newsletter Archives Contact

ETF/No Load Fund Tracker Newsletter For Friday, August 16, 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-08152013/

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Market Commentary

Friday, August 16, 2013

Treasury Yields Surge While Stocks Continue To Head South

U.S. equity markets extended their recent decline into the final hour of trading, in which stocks attempted to erase most of their losses before ultimately closing the session to the downside, as Fed tapering concerns continue to leave investors cautious.

Meanwhile, ten-year treasury yields surge to two-year highs. The DJIA posted its biggest weekly loss this year as rising bond yields hurt shares paying rich dividends. The Dow closed 30 points lower (0.2%) at 15,082, the S&P 500 Index dropped 5 points (0.3%) to 1,656, and the Nasdaq Composite lost 3 points to 3,603.

There was evidence in today’s session of pressing the buy-the-dip trade that was seen early on in the outperformance of the homebuilding stocks, which have been hit hard of late.  Ultimately, the strength in homebuilding stocks faded as the yield on the 10-yr note, and concerns about rising mortgage rates, increased. The on again-off again showing of the homebuilders was representative of the overall action.  There just wasn’t a lot of conviction on either the buy side or the sell side.

Gains in individual stocks like Boeing, Apple, American Express, and United Continental offered a measure of support, but clear-cut sector strength was lacking for the most part today.  Retailers were once again on the soft side after couple big names like Nordstrom and Jos. A. Bank joined the roster of retail companies providing earnings warnings.

The continued rise in long-term rates continued to take a toll on the high-dividend yielding utilities (-1.1%) and telecom services (-1.0%) sectors, which were the only sectors to lose at least 1.0% today.  For the week, the utilities sector dropped 4.4% while the telecom services sector fell 2.3%.

In economics news, housing starts for July came in slightly below expectations, rising 5.9% month-over-month to an annual pace of 896,000 units. Economists called for starts to come in at 900,000 units. Preliminary 2Q nonfarm productivity rose 0.9% on an annualized basis, from the 0.5% increase seen in the 1Q, and compared to the 0.6% gain that was expected. Rounding out a busy week on the economic front, the preliminary University of Michigan Consumer Sentiment Index surprisingly deteriorated, declining to 80.0 in August, from 85.1 in July, compared to economists’ expected increase to 85.5.

It was a second week of losses for the major indexes. The Dow fell 2.2 percent for the week, its biggest decline since June 2012, while the S&P 500 and Nasdaq registered their biggest weekly losses since June, 2013. For the week, the S&P 500 was down 2.1 percent and the Nasdaq was down 1.6 percent. Investors and traders are betting on the Federal Reserve to start reducing its bond purchases next month, which are ultimately hurting U.S. stocks and bonds alike.

Our Trend Tracking Indexes (TTIs) followed the weakness in the markets and closed this volatile week as follows:

Domestic TTI: +1.67% (last week +3.30%)

International TTI: +5.86% (last week +6.85%)

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 Mo:

Q: Ulli: Thanks as always for your work. Hey, did you watch “60 Minutes” on CBS last night, articles about China and its building boom. It was like a sci-fi movie seeing all those brand new high-rise cities, new highways, new malls (with fake brand name signs), etc., all vacant. They talked strongly about a “realty bubble”. If you missed the show, definitely, see it. When the China bubble does break, do you suspect a time to invest in special areas, or a time to go to “cash?”

A: Mo: Investing in special areas is always a possibility, however, the first move after a bubble bursts and/or a sell signal has been generated, is to cash/money market.

Then you can then calmly evaluate whether there are other opportunities. In the past, bonds have been the safe play once equities head into bear market territory, but with interest rates coming off all-time lows, this may not be the case next time. We have to wait and see what other opportunities will present themselves when the time comes.

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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/

ETF/No Load Fund Tracker Newsletter For Friday, August 16, 2013

Ulli ETF Tracker Contact

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-08152013/

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Market Commentary

Friday, August 16, 2013

Treasury Yields Surge While Stocks Continue To Head South

U.S. equity markets extended their recent decline into the final hour of trading, in which stocks attempted to erase most of their losses before ultimately closing the session to the downside, as Fed tapering concerns continue to leave investors cautious.

Meanwhile, ten-year treasury yields surge to two-year highs. The DJIA posted its biggest weekly loss this year as rising bond yields hurt shares paying rich dividends. The Dow closed 30 points lower (0.2%) at 15,082, the S&P 500 Index dropped 5 points (0.3%) to 1,656, and the Nasdaq Composite lost 3 points to 3,603.

There was evidence in today’s session of pressing the buy-the-dip trade that was seen early on in the outperformance of the homebuilding stocks, which have been hit hard of late.  Ultimately, the strength in homebuilding stocks faded as the yield on the 10-yr note, and concerns about rising mortgage rates, increased. The on again-off again showing of the homebuilders was representative of the overall action.  There just wasn’t a lot of conviction on either the buy side or the sell side.

Read More