Fed Remarks, Stocks Retreat

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

Stocks resumed their recent decline as investors sold growth-oriented sectors on speculation the Federal Reserve may slow the pace of its economic stimulus. U.S. equities opened the session on an upbeat note as the Dow Jones Industrial Average appeared poised for its 21st consecutive Tuesday of gains.

However, that changed midway through the trading day when the major averages dipped into the red, where they remained until the close. The Dow fell 76 points (0.5%) to 15,178, the S&P 500 Index moved 9 points (0.6%) lower to 1,631, and the Nasdaq Composite declined 20 points (0.6%) to 3,445.

Today’s economic data was limited to the trade deficit, which widened $3.2 billion to $40.3 billion in April, below the consensus of $41.5 billion. In April, imports rebounded 2.4%, while exports rose 1.2%. Weekly retail sales rebounded 1.9% last week, the most in two months, and is up 4.3% on a y/y basis, the fastest pace in a year, according to the ICSC/Goldman Sachs Chain Store Sales Index. Elsewhere, the latest data from CoreLogic shows house price gains exceeding 12% from a year ago, the fastest pace since February 2006, which means the next bubble is alive and well.

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Bulls Dismiss Negativities And Volatilities

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

Stocks opened a new trading week with gains Monday in a choppy session, despite dismal data which supported views the Federal Reserve will keep economic stimulus in place. The Dow Jones Industrial Average rose 138 points (0.9%) to 15,254, the S&P 500 Index moved 10 points (0.6%) higher to 1,640, and the Nasdaq Composite appreciated by 9 points (0.3%) to 3,465.

Trading was volatile on higher-than-average volume with 879 million shares were traded on the NYSE, and 2.0 billion shares changed hands on the Nasdaq. All three indexes gained at the open, but the S&P 500 and Nasdaq turned negative in late morning before reversing course again to finish higher.

The tech sector registered a slim gain while biotechnology put on pressure throughout the day. The iShares Nasdaq Biotechnology ETF (IBB) fell 1.2%. While the afternoon rally enabled most sectors to erase their early losses, financials, homebuilders, and transportation-related stocks watched from the sidelines.

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ETFs/Mutual Funds On The Cutline – Updated Through 5/31/2013

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 316 (last week 326) 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. 58 ETFs (last week 63) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 809 (last week 818) above the line and 50 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 6/2/2013

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 6/2/2013.

Despite this having been a Holiday shortened week, it did not lack excitement. The dip buyers actually showed up well rested on Tuesday and pushed the market higher in what could be considered a blow out phase.

It was all downhill from there, as the uncertainty about the Fed’s potential tapering of asset purchases was not digested well, which caused downside momentum to accelerate with the S&P 500 surrendering some 1.76%.

Higher yields in bonds, meaning lower bond prices, have many times in the past been the early prognosticator as to the direction of equities. We’ll have to wait and see if these increasing yields will spell the end of this aging bull market or if the dip buyers can show up in full force again to stem the tide.

Over past week, we covered the following:

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New ETFs On The Block: New 1-10 Year TIPS ETF (TIPX)

Ulli Income ETFs Contact

156288184The ETF universe continues to massively grow not only in asset size but also in number of funds. There are now almost 1,500 ETFs available with total assets of over $1.5 trillion.

With many investors are trying to improve the returns of their holdings in this zero interest rate environment, it’s no surprise that ETFs promising higher yields are expanding rapidly. Many of these newcomers will have to prove themselves first over time and show that their volume and yield makes them worthy contenders.

Nasdaq describes the latest ETF addition as follows:

The SPDR Barclays 1-10 Year TIPS ETF (TIPX) looks to follow the Barclays 1-10 YearGovernment Inflation-linked Bond Index which tracks the 1-10 year inflation protected sector of the United States Treasury market. In order to be included in this benchmark, the securities must be TIPS (Treasury Inflation Protected Securities) and have at least one year remaining to maturity and less than 10 years to maturity on the index rebalancing date.

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05-31-2013

Ulli Newsletter Archives Contact

ETF/No Load Fund Tracker Newsletter For Friday, May 31, 2013

ETF/No Load Fund Tracker StatSheet

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

https://theetfbully.com/2013/05/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-05302013/

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Market Commentary

Friday, May 31, 2013

BEARS SHOW UP FOR THE SPANKING OF THE BULLS

It feels as if this is the beginning of a correction, as stocks ended the month of May with big losses, with the Dow Jones Industrial Average and Standard & Poor’s 500 Index posting their worst one-day drops since mid-April.

After moving between small losses and gains for most of the day, the stock market started to drift lower in afternoon trading. The sell-off accelerated in the final hour. The Dow lost 208 points (1.3%) to 15,116, the S&P 500 Index declined 24 points (1.4%) to 1,631, and the Nasdaq Composite descended 35 points (1.0%) to 3,456.

Today, there was both encouraging and disappointing news on the economy. Data showed consumer confidence advanced in May, improved 0.8 points to the highest level in almost six years. The full-month gain was 8.1 points, the most since October 2006. This argues for continued expansion in the current cycle.

Separate reports showed business activity rebounded this month after declining for the first time in more than three years in April, while consumer spending in the U.S. unexpectedly declined last month. Personal consumption expenditures fell 0.2% in April, down for the first time in nearly a year and by the most since September 2009. Economists expected a smaller 0.1% slip.

All ten sectors settled in the red as two defensive groups, consumer staples and health care, led to the downside. Consumer staples endured selling pressure throughout the week, as the group declined 3.2%, which erased its May gain.

Elsewhere, the health care sector fell 2.2% and trimmed its year-to-date gain to 20.1%, surrendering its spot atop this year’s sector leader board to financials. Even with today’s 1.6% loss, the financial sector ended the week with a gain of 5.9%. Technology stocks also enjoyed a strong week, but unlike financials, the group held up relatively well through the selloff.

The European equity markets finished lower, pulling back to three-month lows, in the wake of a plethora of economic reports in the region, while digesting record high euro zone unemployment.

Stocks finished to the downside amid a volatile week of mixed data and uncertainty regarding the Federal Reserve tapering off its asset purchases. For the week, the Dow fell 1.2 percent, the S&P 500 lost 1.1 percent and the Nasdaq dipped 0.1 percent.

For the month of May, the Dow rose 1.9 percent and the Nasdaq gained 3.8 percent. Economic data fostered mixed reactions. Meanwhile, a lowered global growth outlook from the Organization for Economic Cooperation and Development added to the wild ride for the markets this week.

And last not least, Japanese markets added to the volatile theme, with the Nikkei 225 Index posting a more than 5% one-day drop. What’s next: Correction, pullback or crash?

As I have posted repeatedly, we are in unchartered territory due to the Fed’s reckless policies so anything is possible. That’s why it’s important to stay with the major trend until it reverses at which time our sell stops will point the way to the exit door. Some of our holdings are getting close but none were triggered.

Our Trend Tracking Indexes (TTIs) headed south as well and ended the week as follows:

Domestic TTI: +3.06% (last week +4.08%)

International TTI: +6.50% (last week +8.29%)

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 Freden:

Q: Ulli: Thanks again for your wonderful site and amazing information…With the craziness in the markets, it is good to have a voice of reason. My question is this: Most portfolio allocations recommend a percentage of bonds – roughly 35% to be fully diversified. With BWX now well below your 5% sell stop recommendation would you sell it? How about BND if it drops below 5%?

A: Freden: Yes, in fact, I liquidated BWX in our Model ETF portfolio, as it had triggered its 5% trailing sell stop. While BND is still a hold, it may be next on the chopping block. Worries about higher interest rates persist, and we may very well see the bonds move into bear market territory before the stock market does.

In any event, I just simply let my trailing sell stops tell me when it’s time to step aside.

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WOULD YOU LIKE TO HAVE YOUR INVESTMENTS PROFESSIONALLY MANAGED?

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/