There Is Light At The End Of The Tunnel

Ulli Market Commentary Contact

Wed pic

[Chart courtesy of MarketWatch.com]

Domestic equities bounced off of session lows, rebounding from the benchmark index’s biggest two-day slump since June, with the Dow and S&P 500 gaining modest ground while the Nasdaq finished lower for a third day, pressured as investors sold this year’s winning tech stocks including Netflix and Fastenal. Traders were skeptically optimistic following the nomination of Federal Reserve Vice Chair Janet Yellen for Fed Chairman and news that President Obama will meet with lawmakers on Thursday to discuss the debt ceiling and budget impasse, now in its ninth day.

Equities began the session with slim gains, however, given the expected nature of the Fed Chairman announcement, the early boost faded quickly. The major averages appeared on their way to another losing session, but found support during late-morning trade when the Dow Jones Industrial Average tested its 200-day moving average (14,728) for the first time this year.

On a related note, the financial sector (+0.3%) finished ahead of the remaining cyclical groups while other growth-sensitive areas were a bit more mixed. On the downside, the discretionary sector (-0.4%) lagged throughout the session as quick service restaurants displayed weakness after Yum! Brands reported disappointing earnings and made cautious comments about its operating environment going forward.

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7 ETF Model Portfolios You Can Use – Updated through 10/8/2013

Ulli Model ETF Portfolios Contact

With the government shutdown now in its 9th day, with no apparent resolution in sight, the markets have become nervous with the S&P 500 giving back almost 2.5% since last week’s ETF Model Portfolio report.

While our main directional gauge, the Domestic TTI, still remains on the bullish side of the trend line by +1.85%, this is as good a time as any for you to revisit and indentify your trailing sell stops. If history is any indication, this budget impasse will come to a resolution at some point. Once it does, there is a good chance that a relief rally will be in our future.

However, nothing is certain, and politicians certainly could push this gridlock further down the road, which then may have dire consequences for the markets. So, it pays to be prepared. For me, the line in the sand is a clear break of our Domestic TTIs long-term trend line to the downside, which would generate an all-out ‘Sell’ for broadly diversified domestic equity funds/ETFs. Please stay tuned for the latest updates.

In the meantime, here’s the latest ETF Model Portfolio update:

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Major Index ETFs Drown In Fiscal Uncertainty

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

U.S. equities extended yesterday’s solid losses as a gauge of Wall Street anxiety hit its highest level in more than three months with equity markets showing growing concern over no indication of progress from lawmakers on budget and debt ceiling negotiations.

A disappointing debt auction of one-month Treasury bills, which saw the rate almost triple the borrowing costs seen last week, added fuel to the fire, as Treasuries finished mostly lower, with the short-end of the curve seeing the brunt of the pressure amid the fiscal stalemate. Moreover, the government shutdown continues to impede on investors getting pertinent economic data, with the only item on the docket showing a slight decline in business sentiment.

Traders cashed in gains in some of the year’s best performers. The Nasdaq Composite was the biggest loser today, sliding 2.0%.  The cracks in leading names like LinkedIn, Priceline.com, Yahoo and Facebook provided an added cue for buyers to stick mostly to the sidelines. An index of Internet stocks tumbled the most in almost two years, sinking 4.1 percent.

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Stocks Dive Heading Into Second Week Of Shut Down

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

U.S. equities fell on Monday, extending two weeks of losses, amid the continued stalemate in Washington over a budget for the fiscal year, exacerbated by concerns surrounding the looming debt ceiling deadline.

It was a poor start to the week for the equity market and the same thing could be said for politics in Washington. The S&P 500 ended near its lows of the session in a volatile day and dropped for its 10th time in the past 13 sessions. Not surprisingly, volume was on the light side today as the incentive to participate was taken away by Washington’s woes.

An absence of buyers paved a path to a sizable decline when the opening bell rang. Shortly after the start of trading, the Dow, Nasdaq, and S&P 500 dropped 152, 34, and 16 points, respectively.  That lower level soon attracted some buying interest, and the opening losses were eventually cut in half, but the rebound effort ran out of steam. Analysts estimated that each week the shutdown continues it could shave 10 to 15 basis points off gross domestic product.

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ETFs/Mutual Funds On The Cutline – Updated Through 10/04/2013

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 321 (last week 315) 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. 66 ETFs (last week 65) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 795 (last week 800) above the line and 64 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: Is It Likely The US Will Default On Its Obligations?

Ulli Market Review Contact

92835431It’s increasingly likely the current deadlock over the so-called “Obamacare” will be tied to the ensuing debt-ceiling battle and the two issues most likely would be merged from a negotiation and outcome point of view, said Roger Altman, chairman of investment bank Evercore Partners Inc and a former US deputy Treasury secretary.

The big framework however, is that the US is not likely to see more than a passing impact on the economy or on financial markets. If one steps back and studies what’s happened in the past in comparable situations, one would see there’s been only a slight interim impact on the economy, which’s been quickly made up. And the same is true with financial markets.

So, there’s nothing historically to suggest that however ugly, noisy and frustrating this current situation is, there will be any permanently lost output or there will be any permanently lost growth, incomes or asset values, Roger noted.

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