Shut Down Pressures Stocks

Ulli Market Commentary Contact

Wed pic

[Chart courtesy of MarketWatch.com]

U.S. equities ended slightly in the red after spending most of the session in a steady climb off the opening low, as domestic markets erased chunks of yesterday’s gains during the second day of the partial government shutdown.

Adding to worries is the report of a disappointing private sector job growth, which could be the only piece of September payroll data we get this week amid the government shutdown. Treasuries were higher in the wake of the employment data, as well as a dip in weekly domestic mortgage applications.

The shutdown fight is rapidly merging with a higher-stakes battle over the government’s borrowing power that is expected to come to a head soon. Many analysts believe that the longer the shutdown goes on, and the more headlines shift towards the October 17 deadline, investors are becoming more and more concerned. A partial shutdown lasting one week would probably shave 0.1 percentage point from economic growth, according to the median estimate of economists, with the costs accelerating if the closing persists.

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7 ETF Model Portfolios You Can Use – Updated through 10/1/2013

Ulli Model ETF Portfolios Contact

The markets were in slipping and sliding mode since I posted last week’s Model Portfolio report, but yesterday’s rebound rally brought the S&P 500 almost back to where we started 5 trading days ago; the loss was a meager 2 points.

Hopes for a short-lived government shutdown prevail, which helped power yesterday’s rally. Of course, the debt ceiling debacle lingers on the horizon along with general uncertainty about the affordable care act, which went into effect on Oct. 1st.

All models have been meandering over the past week with no notable changes. With the always unpredictable month of October upon us, it’s a wild guessing game as to how the markets will react to the ever growing menu of uncertainties.

Be sure to know where your sell stops should be and execute them when necessary.

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

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Stocks Ignore Shutdown; Buyers Step In

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

After falling to a three-week low yesterday, U.S. equity markets closed the trading session higher to begin the new month and quarter, led by some upbeat manufacturing activity data despite the first partial government shutdown in 17 years.

Investors for now appeared confident that the situation would be short-lived. After dropping seven out of the past eight sessions on concerns about a possible shutdown, traders viewed the pullback as a buying opportunity in the absence of an extended shutdown.

Stocks made the bulk of their advance during the opening minutes before spending most of the afternoon near their highs. Equities appeared unconcerned with the first day of the government shutdown. All ten sectors posted gains as equities drew strength from typical start-of-quarter inflows. Risk assets also benefited from the rebound in Europe where yesterday’s fears of a possible collapse of the Italian government were alleviated.

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Bears Awaiting Government Shut Down

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

U.S. equities were broadly lower, as lawmakers on Capitol Hill continued to quarrel about spending issues with today’s midnight deadline to avoid a partial government shutdown, which is now quickly approaching.

Moreover, Italian political turmoil and a disappointing manufacturing activity read from China exacerbated sentiment. Meanwhile, Treasuries were higher following stronger-than-expected reads on domestic regional manufacturing activity and, as the fiscal showdown in Washington heats up, may be reflecting increased demand for safe haven assets.

Stocks stumbled out of the gate. All ten sectors settled in the red with consumer staples (-1.1%) leading to the downside. Meanwhile, other countercyclical groups ended mixed. Health care (-0.3%) and utilities (-0.1%) outperformed while telecom services (-0.6%) finished in-line. The S&P 500 struggled with its 50-day moving average (1,680) throughout the afternoon, but managed to close just above that level despite weakness among several cyclical sectors.

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ETFs/Mutual Funds On The Cutline – Updated Through 9/27/2013

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 315 (last week 322) 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. 65 ETFs (last week 67) 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: Does The Latest Data Suggest There’s Some Momentum In The Economy?

Ulli Market Review Contact

92835431The latest revised-data on unemployment benefit claims and housing are two very interesting and relevant pieces of information about the US economy, said David Levy, chairman of Jerome Levy Forecasting Center.

They are not contradictory, but they essentially talk about different things. There was a lot of noise in the initial claims data; still there has been enough of a drop now to suggest some kind of acceleration in employment over the past few months. Though there is no perfect relationship between fewer layoffs and a strong job growth, there is a significant correlation between the two nevertheless.

Other indicators, such as net jobs satisfaction according to the Conference Board surveys and the purchasing managers’ index (PMI) services component, all suggest there’s some amount of momentum in the economy. The pickup in hiring activities is in reaction to some of the stability that was witnessed in the economy such as solid corporate profits despite not much growth in sales. The other side though, like softening of the housing market, is equally significant because it indicates the beginning of the end of the housing rise and that’s going to weigh on the economy a little more (than expected) going forward.

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