Markets Pull Back Awaiting Fed Chief’s Statement

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

The longest rally in the Standard & Poor’s 500 Index (SPY) since January came to a halt today in the wake of a mixed bag of economic and earnings news. Tomorrow’s looming semi-annual testimony on Capitol Hill by Federal Reserve Chairman Ben Bernanke may also have contributed to a bit of caution on the Street. The market’s pullback came a day after both the Dow and the S&P 500 ended at record closing highs for the third consecutive session.

Goldman Sachs Group (GS) and Dow member Johnson & Johnson posted better-than-expected results but fellow Dow component Coca-Cola fell short on its revenue figure as a result of lower-than-anticipated volumes. GS gets the gold so far for the biggest beat among the big banks while Dow member Johnson & Johnson posted earnings of $1.48 a share when estimates were for $1.39. Revenue was $17.9 billion beating expectations of $17.7 billion.

Cyclical sectors underperformed with energy and materials leading to the downside. The energy space shed 0.6% while crude oil slipped 0.5% to $105.78 per barrel. Elsewhere, discretionary shares suffered from broad weakness as homebuilders and retailers lagged. Defensively-oriented sectors finished in mixed fashion. Telecom services outperformed with a gain of 0.6% while health care and utilities each lost 0.5%. For its part, the consumer staples sector ended in-line with the broader market. Today market activities were also influenced by economic releases, such as the following.

Read More

Bulls Open The Week With Lack Of Participants

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

An unexpected improvement in U.S. regional manufacturing activity, a rise in business inventories, and an inline 2Q GDP report out of China, was the U.S. equities neede to continue their gains to open the week.

The Standard & Poor’s 500 Index (SPY) settled higher to mark its eight consecutive advance, the longest winning streak since January. The Dow Jones industrial average finished at record closing highs for the third consecutive session. The Nasdaq scored its highest close since September 2000. Volume though was at the lowest level of any full trading day this year.

The release of weak retail sales curbed today’s advance. Retail sales rose 0.4% in June, below the consensus of 0.8%, a sign of consumer fatigue likely due in part to sequester-related furloughs. Retail sales increased at a 3.3% annual rate in Q2, below the 4.2% rate in Q1. This suggests consumer spending would likely be a smaller contributor to GDP growth in Q2 than it was in Q1. Although disappointing, the trends remain positive.

Read More

ETFs/Mutual Funds On The Cutline – Updated Through 7/12/2013

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 304 (last week 263) 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 42) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 802 (last week 756) above the line and 57 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: Will The Fed Taper Asset Purchases In December?

Ulli Market Commentary Contact

92835431We have to look at the minutes and the question-answer portion of his presentation that he gave a couple of hours later in Boston as part of the NBER summer institute separately, says Brian Jacobsen, Chief Portfolio Strategist at Wells Fargo Fund Management.

When it comes to the minutes, there are two important things to look into. First, they were looking at the mortgage markets to find out the effect of higher interest rates on the housing market. The FOMC members seem to have dismissed the effect of higher mortgage rates on housing since housing application numbers didn’t fall significantly. But data released after the June 19 meeting showed mortgage applications actually plummeted as a result of higher interest rates. So, they probably have to do a rethink on the effect these higher rates are going to have on the housing market, he noted.

The second aspect that was in the minutes was actually what was not in the minutes; the 7 percent limit that the chairman had set at the press-conference afterwards saying that they are hoping to wrap up the assets purchase program by the time the unemployment rate hits 7 percent, which wasn’t in the minutes. So it is not a firm commitment by the Fed to actually wrap things up when the economy gets to that sort of unemployment rate, Brian said.

Read More

New ETFs On The Block: SPDR Russell 2000 ETF (TWOK)

Ulli Equity ETFs Contact

94177589State Street Global Advisors, the Boston, MA-based second largest issuer of exchanged-traded products with $328 billion in ETF assets, has launched the SPDR Russell 2000 ETF (TWOK). TWOK is a small-capitalization company focused equity fund and is set to rival the iShares Russell 2000 ETF (IWM) and the Vanguard Russell 2000 ETF (VTWO).

TWOK tracks the Russell 2000 Index, arguably the most popular small capitalization benchmark that many consider to be a barometer of small-cap performance in America. The index is a subset of the Russell 3000 Index and with approximately 2000 securities represents about 10 percent of the total market-cap of the former.

Needless to say, the vast number of constituents in the index results in a much diversified exposure. As of March 31, 2013, the index was comprised of 1,952 securities. The index is reconstituted completely every year to ensure larger stocks don’t distort the risk-reward characteristics of the benchmark.

The fund is well diversified across sectors and should appeal to investors who prefer wider exposure in the economy. No single constituent exceeds 0.33 percent of the total holding of the fund, thus minimizing nonsystematic/company specific risks.

Read More