7 ETF Model Portfolios You Can Use – Updated through 7/23/2013

Ulli Model ETF Portfolios Contact

The upward march of the major equity indexes continued with the S&P 500 adding almost 1% to move into record territory.

This week’s attempt to break the magic 1,700 milestone marker has failed so far, although we touched the 1,699 level yesterday. Very likely, any really bad economic news, validating that the Fed’s money pumping efforts are justified, should propel us through that current glass ceiling.

While bond ETFs have rebounded off their lows somewhat, they still remain below their respective long trend lines and therefore in bear market territory. To me, they do not present an investment opportunity at this time.

Here’s the latest ETF Model Portfolio update:

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Mixed Signals Keep Investors On The Fence

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

U.S. stocks ended mixed with the Dow industrials and the S&P 500 staying close to record intraday highs in a tight trading range, as the unexpected contraction in regional manufacturing activity and the plethora of divergent earnings reports left traders on the fence. SPY fell, halting a streak of four straight gains.

Overseas, investors increased speculation that the Chinese government will deploy economic stimulus measures to combat a slowing economy. Stocks in Asia finished broadly higher, while European equity markets finished to the downside.

Shortly after the opening bell, the Dow Jones industrial average climbed to an intraday record high of 15,604.22, while the S&P 500 reached an all-time intraday high of 1,698.78. The Dow outperformed the broader market thanks to United Technologies and DuPont, along with Texas Instruments, posting stronger-than-expected profits. The Materials sector finished the day in the lead. It was closely followed by yesterday’s biggest laggard, energy.

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SPY’s Third Consecutive Record Closing High

Ulli Market Commentary Contact

Mond pic

[Chart courtesy of MarketWatch.com]

The major U.S. equity indices closed the trading day with modest gains after housing data and earnings from companies including McDonald’s Corp. fueled speculation stimulus would continue. Investors have increasingly turned to stocks this month, as U.S. equity ETFs are receiving money at the fastest rate since September 2008. On the flip side, this will end badly for those who are not prepared to exit once the inevitable downturn arrives.

Last week, the first round of second quarter earnings brought a fair share of top line misses. This week started on a similar note after Dow component McDonald’s reported 2Q earnings of $1.38 per share, below the $1.40 Reuters consensus estimate, as revenues increased 2% year-over-year (y/y) to $7.1 billion, roughly inline with what the Street had anticipated. Outside of earnings, Yahoo Inc. announced that it has reached an agreement to repurchase 40 million shares of its common stock owned by Third Point LLC at a purchase price of $29.11 per share.

The only major domestic economic report today was existing-home sales, which surprisingly declined, decreasing 1.2% month-over-month (m/m) in June to an annual rate of 5.08 million units, below the 5.26 million unit Bloomberg estimate, but are 15.2% higher than last year. The median existing-home price rose 13.5% from a year ago to $214,200, marking the 16th consecutive month of y/y price increases. The supply of homes available for sale increased 1.9% m/m but remains 7.6% lower y/y at 2.19 million units, equating to 5.2 months of supply at the current sales pace. The drop in home sales does not bode well for the future.

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ETFs/Mutual Funds On The Cutline – Updated Through 7/19/2013

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 309 (last week 304) 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. 57 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 803 (last week 802) 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.

One Man’s Opinion: Has Poor Communications And Lack Of Pragmatic Response From The Fed Caused The Present Uncertainty?

Ulli Market Review Contact

92835431In his latest congressional testimony and the following Q&A session, Federal Reserve Chairman Ben Bernanke tried to distinguish between tapering and tightening and underlined the degree of conditionality that really relates to tapering, says Jeremy Stretch, Head of Currency Strategy at the Canadian Imperial Bank of Commerce.

Bernanke has managed to outline the difference between tapering and tightening relatively well this time and certainly didn’t create the uncertainty and market panic that he did after the June 19th meeting, Jeremy noted.

Asked if he understands what the Fed is thinking about since volatility over the last few months has been quite extreme, Jeremy said the clear underlying metric is data here. Data is the key variable that will determine the degree of tapering and the timing of it. This is unchartered territory for the central bank, and the Federal Reserve has been attempting to find the best way to communicate to the market. There are bubbles being created in the equity market, which have also started to unsettle the bond market.

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New ETFs On The Block: Ishares MSCI USA Quality Factor ETF (QUAL)

Ulli Equity ETFs Contact

139868600As investor euphoria over equities scaling new highs and bullish price action remain the dominant theme on Wall Street, iShares has moved in fast to take advantage of market sentiment.

The exchange-traded products arm of BlackRock Inc. has launched a US equities-ETF that rounds out the factor-based funds the firm launched earlier this year and adds to its impressive portfolio of nearly 300 ETPs.

The iShares MSCI USA Quality Factor ETF (QUAL) tracks the iShares MSCI USA Quality Index, which actually is a twist on the existing broader MSCI USA Index. The MSCI Quality Index is comprised of large and mid-cap stocks, and the new fund takes a factor-based approach to trim down the eligible securities universe. It employs three metrics of quality: stable year-over-year earnings growth, high return on equity and low overall debt level. Empirical data shows correlation among factors is relatively low.

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