Bulls Kick-Off Year’s Second Half On Solid Data

Ulli Market Commentary Contact

Mon Pic

[Chart courtesy of MarketWatch.com]

Stocks started hot on Monday with strong gains across the board; the second half of the year began in the same positive fashion as the first half, rebounding from Friday’s sell-off. But volume lagged all day, and prices cooled down by day’s end. Upbeat manufacturing reports from the U.S., Japan, and the Eurozone among others helped to fuel the broad-based rally. Treasuries were slightly higher following the return to expansion territory for manufacturing activities and constructions.

Despite mixed data out of China, as the country’s Manufacturing PMI declined to 50.10 from 50.80, stocks climbed at the open, taking a cue from gains in major markets across the world. Meanwhile, most European Manufacturing PMI reports surprised to the upside, but only Great Britain posted an expansionary reading while Spain came in right on the border between contraction and expansion. The aggregate Eurozone Manufacturing PMI ticked up to 48.8 from 48.7.

In the U.S., the ISM Manufacturing Index rebounded 1.9 points in June, its first increase in four months, to 50.9, above the consensus of 50.0. It indicated the manufacturing sector expanded in 45 of the past 47 months.

Moreover, The ISM prices index increased slightly to 52.5, but remained in the zone consistent with low consumer inflationary pressures. Finally, construction spending rose 0.5% in May, close to the consensus of 0.6%, reaching its highest level since September 2009. Taken together, the market showed a solid chance of posting a follow-through day.

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ETFs/Mutual Funds On The Cutline – Updated Through 6/28/2013

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 263 (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. 43 ETFs (last week 45) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 749 (last week 722) above the line and 110 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.

Last Week In Review: ETF News And Blog Posts To 6/30/2013

Ulli Market Review Contact

In case you missed it, here’s a summary of the ETF topics and market commentaries I posted to my blog during the week ending on 6/30/2013.

The past week started out on very shaky ground as far as bullish momentum was concerned. The reason was the fallout from the Fed’s taper talk that pushed the S&P 500 down to the 1,573 level and below its widely followed 50-day moving average.

It sure looked like that this level was way too close for comfort, as a host of Fed governors subsequently took to the airwaves to “clarify” the Fed’s true intentions via several damage control speeches. For the time being that assist worked with the major indexes rallying for 3 days before giving back some of these gains on Friday.

Our Domestic Trend Tracking Index (TTI), which had briefly dipped into bearish territory on Monday, recovered as well and closed the week on the bullish side of the trend line; although very modestly. I believe this possible trend reversal may surface again after the 4th of July weekend.

Over past week, we covered the following:

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One Man’s Opinion: Did The Fed’s Taper-Talk Come Earlier Than Expected?

Ulli Market Commentary Contact

92835431Federal Reserve Chairman Ben Bernanke’s announcement that the central bank could slow down its assets purchase program by September triggered a sell-off in the fixed-income markets, pushing yields higher.

The Fed’s move, however, seems to have come a little earlier than anticipated, says Ira Jersey, interest-rate strategist at Credit Suisse Group AG. Asked if he agreed that the economy is good enough to start rolling back some of the QE, Ira answered in the negative.

The Fed’s own forecast says growth and inflation will accelerate in the second half of the year and hence a couple of month’s data is required before reaching any conclusion. One of the reasons why the Fed might be doing this is to pave the way for the next chairperson where chairman Bernanke can take some of the blame if there is an economic slowdown due to the reduction in quantitative easing, he explained.

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New ETFs On The Block: Horizons S&P 500 Covered Call ETF (HSPX)

Ulli Covered Call Strategy Contact

139868600Markets turned volatile across the globe after the Federal Reserve indicated it may slow down its asset purchase program later this year. A tapering of QE3 is likely to be followed by a hike in interest rates, which in turn will put downward pressure on fixed-income portfolios. Investors are naturally worried about greater volatility and are seeking stability while protecting their income.

Horizon’s ETFs Management Inc., a Toronto, Canada-based ETF issuer has launched its first US-listed exchange-traded fund that attempts to generate additional monthly income while reducing volatility. The firm manages/sponsors funds in Canada, Australia, South Korea and Hong Kong, with total ETF assets under management exceeding $7 billion.

The Horizon’s S&P 500 Covered Call ETF (HSPX) will track the S&P 500 Stock Covered Call Index, a benchmark that gives investors exposure to covered-call strategy. In a covered call strategy an investor who owns a stock sells out-of-money call options on the same stock, and collects the premium paid by the buyer of the stock. Such a strategy reduces volatility and generates higher returns for investors compared to a plain-vanilla long-only equity portfolio.

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06-28-2013

Ulli Newsletter Archives Contact

ETF/No Load Fund Tracker Newsletter For Friday, June 28, 2013

ETF/No Load Fund Tracker StatSheet

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THE LINK TO OUR CURRENT ETF/MUTUAL FUND STATSHEET IS:

https://theetfbully.com/2013/06/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-06272013/

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Market Commentary

Friday, June 28, 2013

STOCKS END MIXED BUT BEST FIRST HALF SINCE 1998

U.S. equities had a rollercoaster week that ended on a downward slope. Traders grappled with a plethora of disappointing corporate earnings releases and a larger-than-anticipated decline in regional manufacturing activity, which overshadowed an upward revision to US consumer sentiment.

The Dow Jones Industrial Average closed 115 points lower (0.7%) at 14,909, the Standard & Poor’s 500 Index decreased 7 points (0.4%) to 1,606, and the Nasdaq Composite was nearly flat at 3,403. In heavy volume due to index rebalancing, 1.7 billion shares changed hand on the NYSE, and 2.5 billion shares were traded on the Nasdaq.

The Dow along with the S&P 500 ended Friday’s session with their best first half performance of any year since 1998 after reaching record highs in May on a rally underpinned by the Fed’s massive monetary stimulus. Stocks slipped out of the gate amid weakness in Treasuries. The 10-yr note sold off into the cash session open before erasing most of its losses. The benchmark 10-yr yield ended higher by two basis points at 2.493%. The losses on equities were broad, with eight of the 10 S&P 500 industrial sectors declining. Only utilities and consumer discretionary shares closed higher.

On the positive note, the Reuters/University of Michigan Consumer Sentiment Index rose 1.4 points from the preliminary reading to 84.1 in June, the second highest level since July 2007. The index slipped 0.4 points for the month. On a y/y basis, the index is up 14.9%, indicating a bullish mode for the economy. The Chicago Purchasing Managers Index showed a slowdown in manufacturing activity growth that was more than expected, decreasing to 51.6 in June, from the unrevised 58.7 in May. Economists had forecasted a decline to 55.0. Now let’s look at the week in review.

The markets recovered some of the recent sell-off this week as a plethora of upbeat domestic economic painted a better picture of the economy. Stocks were also able to show some resiliency in the face of festering credit crisis concerns out of China, as well as the increased likelihood of asset purchase tapering by the Fed.

Good news included durable goods orders that came in stronger than expected, personal consumption and spending rose, jobless claims declined, while Consumer Confidence jumped to the highest level since January 2008.

For the week, the Dow rose 0.7 percent, the S&P 500 gained 0.9 percent and the Nasdaq advanced 1.4 percent. However, both the S&P 500 and Nasdaq snapped a seven-month winning streak, while the Dow broke a six-month surge. For the month, the Dow fell 1.4 percent, the S&P 500 lost 1.5 percent and the Nasdaq dropped 1.5 percent.

Markets will have a mid-week break, with a shortened day on Wednesday and closure on Thursday, to celebrate Independence Day. The week will end with jobs data.

We saw the Domestic TTI briefly dip into bear market territory on Monday before the rebound pushed the markets higher, which was caused by various Fed governors jawboning about the lack of understanding Wall Street had about the Fed’s tapering intentions. In other words, it was nothing but damage control that provided this week’s possible dead cat bounce.

We’ll have to see if that damage control can hold up the major indexes once we get past the 4th of July weekend and into the slow summer days.

Ending the quarter, our Trend Tracking Indexes (TTIs) closed as follows:

Domestic TTI: +0.84% (last week +0.42%)

International TTI: +2.88% (last week +2.23%)

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 Maghar:

Q: Ulli:  Your recent comment that normally conservative securities have shown twice the volatility, like SPLV was down about 8% compared to SPY about 4. I wonder how that could happen?

A: Maghar: We are having a totally distorted and manipulated market environment and risk on and risk off tendencies switch at a moment’s notice so that alleged less volatile ETFs all of a sudden can get very volatile.

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Back issues of the ETF/No Load Fund Tracker are available on the web at:

https://theetfbully.com/newsletter-archives/