A Cornucopia Of Upside On Thanksgiving

Ulli Market Commentary Contact

Wed pic

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

Stockholders have plenty to be thankful for this Thanksgiving. And the day before the holiday gave them even more reason to be pleased. Both the Dow and S&P pushed into record territory yet again. At the same time, the Nasdaq hit its highest level since the tech bubble 13 years ago. Hewlett-Packard (HPQ) led the push by climbing more than 9% after its earnings announcement.

On the economic front there was more reason to celebrate. The Labor Department says there were 316,000 new jobless claims filed last week. That was below the 330,000 which were expected. Meanwhile, a separate report showed durable goods orders fell 2% in October when expectations had been for a drop of 2.2%.

Iran and world powers entered into a preliminary six-month accord in which Iran would curb its nuclear activities in exchange for easing international sanctions on oil, auto parts, gold and precious metals.  If sanctions are lifted on Iran, it would add one million barrels per day of oil to world markets by next year and improve long-term oil supply conditions. The mixed sentiment has put oil ETFs in focus for the coming weeks. These ETFs might be easier plays for investors than trying to deal directly in the futures market.

Here is the latest update of our ETFs in the Spotlight:

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7 ETF Model Portfolios You Can Use – Updated through 11/26/2013

Ulli Model ETF Portfolios Contact

Over the past week, the major indexes pushed through milestones with the S&P 500 crossing 1,800 for the first time after the Dow breached the 16,000 mark while the Nasdaq pierced through 4,000.

As I have posted before, balanced portfolios were not the place to be throughout this year as bonds slipped into bear market territory while precious metals got taken out to barn and spanked in no uncertain terms.

That left equities as the #1 choice as demonstrated by the model portfolios, in which only the equity portions performed well while most other holdings lagged the major indexes severely. That is the problem when strictly sticking to a model when external circumstances, such reckless Fed stimulation and intervention, demonstrate that major trends lie elsewhere.

Hopefully, you adjusted your holdings as I did during the past year by dropping those non-performing parts of your portfolio. Given that Fed stimulus, in one form or another, is here to stay with us to prevent the markets from melting down, it pays to stick to those areas that are trending up.

In that sense, at least for the time being, the models are no longer a valid concept to follow, which is why I replaced them a month ago with the daily update of our “ETFs in the Spotlight.”

After today, the ETF model portfolio posts will be discontinued until such time that their validity can be reestablished again. We are in an era where unintended consequences due to Fed meddling in the markets can pop up anytime, which is why I believe it’s best to concentrate only on those asset classes with an established upward trend with the idea to ride it till it ends, at which time our sell stops will point the way to the exit doors.

Here’s the latest ETF Model Portfolio update:

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Nasdaq Conquers 4,000; Gold-Mining ETFs Slip

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

Stocks ended in the green, but just barely as traders took profits ahead of the holiday.  The Nasdaq composite index closed above 4,000 on Tuesday for the first time since 2000, while the Dow and S&P ended barely changed.  Retailers and homebuilders were among the best performing sectors, responding to stronger-than-expected earnings and robust housing market data.  Given the steady and solid performance of the stock market over the past couple of months, perhaps the take away here is that the whole partial government shutdown thing was a real non-event.  Trading is still expected to remain light this week, with financial markets closed Thursday for the Thanksgiving holiday.

Internationally, European stocks dipped on Tuesday, as corporate profit warnings and lower-than-expected U.S. consumer confidence data kept benchmark indexes in ranges that were set earlier this month. With Europe’s earnings season drawing to an end, results have been disappointing. About half of companies missed profit forecasts and nearly two-thirds have missed revenue forecasts, according to data from Thomson Reuters StarMine.

Gold was all the roar in the ETF world today. We saw major gold-mining ETFs lose ground as the industry’s tango with the Federal Reserve continues. Concerns over the much-anticipated tapering (of quantitative easing) continue to keep downward pressure on gold prices, with the spot price off nearly 0.75 percent on Tuesday. Keep an eye out for the effects of the anticipated tapering on commodities such as gold in the weeks to come.

Here is the latest update of our ETFs in the Spotlight:

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Mixed Emotions

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

The major indexes appeared to meander aimlessly with the Dow and Nasdaq edging slightly higher while the S&P 500 dropped late in the session to post a minor loss.

After breaking major milestones last week, the market looked a little tired as volume slowed down during this Holiday shortened week, which can easily exaggerate directional moves. The weekend deal between six global powers and Iran, to curb Teheran’s nuclear program had, while making headlines news, only a limited market effect as details still remain sketchy.

One immediate effect was a drop in oil prices which, should they last, will have a positive economic effect. Most of our ETFs in the spotlight came off their highs by a small margin, while two of them made new highs.

Let’s take a look:

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ETFs/Mutual Funds On The Cutline – Updated Through 11/22/2013

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 340 (last week 339) 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. 71 ETFs (last week 71) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 794 (last week 799) above the line and 56 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: How Many European Banks May Fail ECB’s Stress Test?

Ulli Market Review Contact

92835431Germany will lead the recovery within the core eurozone in 2014 while Spain will lead the recovery in the periphery, said Alberto Gallo, head of macro credit research at the Royal Bank of Scotland. The Eurozone faces deflation risk today because there has been too much austerity (government spending cuts) and bank deleveraging.

Germany has already provided extra support to Portugal, Greece and Ireland, and is likely to continue doing so in 2014. The European Central Bank is likely to slow down the deleveraging process next year, which in turn, will help banks to heal. That will solve the disinflation problem and will make the recovery durable.

However, the pace of recovery will not be equal across the currency bloc as countries like France and Italy have fallen behind on economic reforms while Spain has zoomed ahead, said Alberto.

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