Markets Continue To Climb As Yellen Inches Closer To Fed Reserve Seat

Ulli Market Commentary Contact

Wed pic

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

Both the S&P 500 and the Dow Jones industrial average have been hitting a series of record highs this year (1,782 even and 15,821.63, respectively) as the economy allegedly improves, the Federal Reserve keeps up its bond-buying program and as U.S. companies report higher earnings.  All represent feel good signs as we head toward the holiday season.  Some relate the impressive performance of the market today to the news of Janet Yellen taking over as the head of the Federal Reserve.

In China news, Communist Party leaders in Beijing pledged to promote market forces in the country’s state-dominated economy after the four-day meeting wrapped up late Tuesday. But in a disappointment for reform advocates, they failed to announce dramatic changes such as curbing the dominance of state industry, extending property rights to farmers or relaxing the one child birth control policy.

Rumors of a new ETF were confirmed today as State Street Global Advisors announced it is planning to launch a “floating rate treasuries ETF” that will list on the NYSE and trade under the FLTY.  It will be based on an index that aims to track the market for floating rate notes of the United States Treasury.

Here are our ETFs in the spotlight:

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7 ETF Model Portfolios You Can Use – Updated through 11/12/2013

Ulli Model ETF Portfolios Contact

While the markets staged a broad sell off last Thursday, the losses were quickly recovered on Friday as the dip buying crowed stepped in and pushed the indexes back to their previous highs.

In the end, a week after the latest model ETF portfolio report, the major indexes are barely changed as new talk of reducing the QE stimulus program sooner rather than later kept a lid on market advances.

Our models barely changed and, as I have posted before, those components that were not in the domestic equity asset class, pulled down performance severely this year. If you are actively managing your own money, the lesson is simply this. You may have started out the year using a model as a base, as I did, but as new trends emerged, such as the bond bear market, it was necessary to make adjustments and move out of the confines of a strict model portfolio. To demonstrate the importance of this fact, I left the models in their original configuration, so you could see the consequences of such an approach.

Here’s the latest ETF Model Portfolio update:

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Taper Worry Is Back On

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

The major indexes meandered with the Dow coming off its record high as worries about the Fed reducing its stimulus program sooner rather than later. Atlanta Fed president Lockhart threw the fly in the ointment by proclaiming that the central could cut back its bond buying program as soon as December while Dallas Fed president Fisher chimed in that they will have to taper at some point.

And that’s how it will be from heron forward, as markets may rally on mediocre economic news and sell off on positive ones; we’ve seen that theme all year. Again, personally, I don’t believe that the economy has any staying power on its own, and we may very well see increased stimulus next year rather than a reduction.

The S&P’s two-day winning streak came to an end as the earnings season is winding down. Today’s predominantly sideways action may continue for a while until a new driver emerges that could propel the indexes higher; of course, the fear of a long overdue correction will always be with us, so be prepared to have your exit strategy in place via my recommended trailing sell stop discipline.

Here are our ETFs in the spotlight:

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The Dow Makes Us Bow Again

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

The Dow Jones has exceeded expectations once again as it rose to another all-time high today.  It seems investors are “hanging 10” on the wave of momentum that the surprisingly strong U.S. jobs report created last Friday.  This is a hard pill to swallow as we near year-end, because all-time highs like this often make investors skeptical to put more money into stocks, yet at the same time it is so hard to walk away from returns like we have seen in 2013.  However, we are still in Bull Market territory.

In the ETF world today, the Healthcare and Energy sectors were the top performers, showing gains of 0.24% and 0.18% respectively.

With all the tweets about Twitter’s IPO last week and given the volatility inherent to software IPOs, one might be hesitant to invest directly in the company.  However, investors that do not want to take the risk of investing in a single company such as Twitter will have another option for owning the social media stock this week.

At least a couple of ETFs are set to add TWTR to their portfolio in the next five days, creating a new avenue for investors to own a piece of the company: Global X Social Media ETF(NASDAQ: SOCL), Renaissance IPO ETF (NYSE: IPO) and First Trust IPOX 100 Index ETF (NYSE: FPX) will most likely all pick up the stock, but I am curious to see who adds it to their portfolio first.

Here are the ETFs in the spotlight:

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ETFs/Mutual Funds On The Cutline – Updated Through 11/8/2013

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 322 (last week 332) 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. 68 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 797 (last week 811) above the line and 62 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: Will US Growth Will Pick Up Next Year?

Ulli Market Review Contact

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The economic recovery will not be as good as it has been historically after recessions, but the economy will do better than what it has done recently, said Maury Harris, managing director and chief US economist at UBS. There have been a number of problems that have been holding back growth and probably won’t be as harmful next year. From a historical standpoint, this isn’t normal, Maury said.

There was a modest increase in consumer spending recently. Asked if that means people have more disposable income or they are simply using credit to pay for basic necessities, Maury said a couple of things are going on simultaneously now.

Firstly, incomes are not going up that fast, but neither are prices. So whatever people are making can be stretched further. Secondly, the latest report shows people have started to borrow again. Also, for people who own home, there has been a nice turnaround in house prices; a phenomenon that economists call the “wealth effect.” So there has been a couple of factors that have been pushing up consumer spending, he explained.

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