No Convictions—Markets Slip In Quiet Session

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

Major market index ETFs had an up and down Monday as they moved above and below the flat line in choppy action, finishing mixed and nearly flat, as a plethora of divergent global economic data and an empty domestic docket met an upgrade of the U.S.’ credit rating outlook by Standard & Poor’s.

The market did not provide a lot of trading excitement today. The Dow Jones Industrial Average declined 10 points (0.1%) to 15,238, the S&P 500 Index lost nearly a point to 1,643, and the Nasdaq Composite gained 5 points (0.1%) to 3,474.

There was some excitement when it was announced before the open that Standard & Poor’s raised its U.S. outlook to Stable from Negative, citing a lessening of downside risks to its AA+ rating for U.S. sovereign debt.  The reaction to the revision of the U.S. sovereign credit outlook gave stocks only a short-lived lift, as a concurrent rise in long-term interest rates seemed to limit the stock market’s enthusiasm for the outlook change. The yield on the 10-year note moved up to 2.23%, or roughly six basis points higher than where it settled on Friday.  There were no major U.S. economic reports scheduled to be released today.

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ETFs/Mutual Funds On The Cutline – Updated Through 6/7/2013

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 313 (last week 316) of them 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. 57 ETFs (last week 58) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 804 (last week 809) above the line and 55 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 6/9/2013

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 6/9/2013.

It was a roller coaster ride on Wall Street, as the bears took over for the first time in a while, but the bulls battled back and, in the end, all losses were recovered while the S&P 500 managed to eke out a gain of 0.7%.

It was one of those weeks that could have ended very badly with the Dow slipping below 15,000 and the S&P rapidly approaching the 1,600 level. Suddenly, the dip buying crowd appeared and, in anticipation of a better than expected employment report, the major indexes rallied sharply during the last hour on Thursday with momentum picking up Friday; so, we closed at the day’s highs.

Over past week, we covered the following:

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One Man’s Opinion: Are Fixed Income ETFs Great Tools For Tactical Asset Allocation?

Ulli Market Commentary Contact

92835431Investors are recognizing interest rates can’t stay as low as they have been forever and there is a realization the bull market that has been witnessed in fixed-income is going to end, says Matthew Tucker, Fixed Income Strategy Head at iShares Blackrock Inc.

What is interesting though is that every year, or rather every month, there is this same conversation about the Federal Reserve raising interest rates and tapering the quantitative easing program. However, iShares tends to see it in terms of fund flows and investor reaction. Since the 10-year yield crossed the 2 percent mark, renewed fear on rising interest rates seems to have been triggered. Under such circumstances, investors tend to shift funds into shorter duration and shorter maturity fixed income instruments, he observed.

Asked if the markets are currently witnessing such an adjustment, Matt answered in the affirmative. The first adjustment took place in February, followed by March and May, he added. However, investors need to realize that it is not the beginning of the end (of quantitative easing) and they still need to be mindful of the Fed and the latest jobs report. Until the Fed is able to achieve its goals in terms of reducing unemployment and inspiring growth, it is quite likely the economy will be in an environment where the central bank continues to provide accommodation through QE, he noted.

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New ETFs On The Block: Wisdomtree US Dividend Growth Fund (DGRW)

Ulli Dividend ETFs Contact

94177589WisdomTree, the New York-based exchange-traded fund sponsor best known for its fundamental indexes, has further enhanced its offering of dividend focused ETFs with the recent launch of a dividend payout fund that tracks US companies showing good dividend growth prospects.

The new product, the WisdomTree US Dividend Growth Fund (DGRW), is likely to compete with other funds in the dividend growth niche, especially the Vanguard Dividend Appreciation ETF (VIG) and the S&P SPDR Dividend ETF (SDY), both which have more than $10 billion in AUM.

In keeping with the sponsor’s fundamental indexing approach, the new fund tracks the WisdomTree US Dividend Growth Index, a proprietary dividend-weighted benchmark that consists of about 300 companies that have a market capitalization of at least $2 billion. The constituents are selected based on both quality and growth factors that gives a holistic approach to dividend investing while blending characteristics of both active and passive management styles. The index is rebalanced annually to reflect the proportionate share of cash dividends each component is projected to pay in the coming year.

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06-07-2013

Ulli Newsletter Archives Contact

ETF/No Load Fund Tracker Newsletter For Friday, June 7, 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-06062013/

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Market Commentary

Friday, June 7, 2013

BULLS CHEER UNEMPLOYMENT REPORT

A wild week of trading came to an end with U.S. markets closing nicely higher as the Dow Jones Industrial Average scored its best day since January 2, and the Standard & Poor’s 500 Index ended a two-week losing streak with the best two-day rally since January.

The Dow closed 208 points higher (1.4%) at 15,248, the S&P 500 Index increased 21 points (1.3%) to 1,643, and the Nasdaq Composite ascended 45 points (1.3%) to 3,469. Stocks rallied after a mixed May employment report, which may suggest that the Federal Reserve will at least maintain its current pace of asset purchases until the lukewarm U.S. economy can show substantial signs of improvement.

Nonfarm payrolls increased by 175,000 in May, close to the consensus of 169,000. The unemployment rate, however, ticked up for the first time in four months on rounding to 7.6% from 7.5%, above expectations of 7.5%. The average workweek remained at an upwardly revised 34.5 hours. The labor force expanded by 420,000, with 319,000 more people counted as employed and 101,000 more unemployed. Those not in the labor force fell by 231,000, the biggest decline in seven months.

While the headline number surprised to the upside, the increase in the unemployment rate suggests the Federal Reserve will maintain its accommodative policy course in the immediate term. Cyclical sectors ended among the leaders as financials, industrials, and discretionary shares all gained more than 1.7%. Boeing, Walt Disney and American Express added more than 2.4 percent. The industrial sector stood out as transportation and defense companies rallied broadly. The discretionary sector added 1.8% as retailers provided a measure of support to the growth-oriented space. Many of today’s outperformers included recent laggards.

Through the wild swings of the market action this week, U.S. stocks finished modestly in the green as data suggested the economy remains soft enough to keep the Fed from expediting its exit plan. For the week, the Dow gained 0.9 percent, the S&P 500 rose 0.8 percent, and the Nasdaq added 0.4 percent.

The ISM Manufacturing Index unexpectedly depicted contraction and construction spending and factory orders rose at smaller rates than expected, offsetting a relatively upbeat Fed Beige Book report and a slightly stronger-than-expected ISM non-Manufacturing Index.

Meanwhile, Japan and Europe added to the volatility. Japanese markets falling sharply and briefly hitting bear market territory, as the yen continued to rally amid the nation’s disappointing long-term economic strategy. At the same time, the European Central Bank held off on providing additional stimulus measures while offering a mixed economic growth outlook.

Will volatility continue as traders and investors keep grappling over the Fed’s exit plan? Right now, it seems to be a tug-of-war between bulls and bears but I believe the stance of the Fed will eventually determine whether the next leg in the markets will be up or down.

Our Trend Tracking Indexes (TTIs) went pretty much sideways and ended the week as follows:

Domestic TTI: +3.04% (last week +3.06%)

International TTI: +6.14% (last week +6.50%)

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 Thomas:

Q: Ulli: Good morning. I need your opinion; I have a large share of my fixed income invested in HYG & JNK. Should I sell both positions at this time? Thank you.

A: Thomas: As you know, I let my trailing sell stops make those decisions for me, so that I don’t have to be emotionally involved. Depending on your risk tolerance, you can use a 5% or 7% trailing stop.

Figure out your high point from the time you purchased these ETFs, reduce that number by the dividends received, and then apply your sell stop. If it gets triggered, you sell; if not, you continue to hold. That’s what I would do.

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Do you have the time to follow our investment plans yourself? If you are a busy professional who would like to have his portfolio managed using our methodology, please contact me directly or get more details at:

https://theetfbully.com/personal-investment-management/

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

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