Bulls Prevail Despite Military Tensions

Ulli Market Commentary Contact

Wed pic

[Chart courtesy of MarketWatch.com]

U.S. equity indexes showed a little resiliency and closed higher, recouping some of the losses from two-straight sessions in negative territory, as investors shrugged off disappointing housing data and escalating tensions in Syria. Crude oil prices continued to rally amid political tensions, boosting energy stocks, and the U.S. dollar gained ground.

Meanwhile, Treasuries were lower despite a surprising decline in pending home sales and a decrease in mortgage applications. Trading volume was thin and came after a drop in the S&P 500 index on Tuesday to its lowest in two months. The index settled higher by 0.3% to follow yesterday’s 1.6% slide. Although the benchmark index advanced, it was unable to retake its 100-day moving average.

Eight of ten sectors finished in positive territory with energy leading the way. The sector displayed significant strength, climbing 1.8%, after outperforming during yesterday’s session. Thanks to today’s jump, energy is the only sector trading in positive territory this month.

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7 ETF Model Portfolios You Can Use – Updated through 8/27/2013

Ulli Model ETF Portfolios Contact

As if QE taper considerations were not enough, Syrian war talks joined the party and total uncertainty pulled the major indexes lower with the S&P 500 losing some 1.3% since last week’s model portfolio report.

Even improved consumer confidence and rising home prices were not enough to bring out the usually very reliable buy-the-dip crowd, so the markets took the path of least resistance, which was down.

All models retreated along with the indexes, and we’ll have to wait and see if downward momentum will accelerate to a point that would not only stop us out of some of our equity positions but also push the Trend Tracking Indexes (TTIs) into bear market territory.

Domestically, we’re only 1.15% away from breaking the trend line to the downside, which currently is a real possibility, unless a new catalyst suddenly emerges to pull the indexes out of this slide.

Here’s the latest ETF Model Portfolio update:

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Syria Tensions Take Down Stocks

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

Major Index ETFs suffered the worst day since June slumping in a broad decline as geopolitical concerns over a possible US-led military response against Syria worsened, overshadowing data showing an unexpected improvement in Consumer Confidence, a rise in housing prices, and a jump in regional manufacturing activity.

The S&P 500 closed below its 100-day moving average, a sign of weak short-term momentum. The day’s fall extends recent losses on uncertainty over when the U.S. Federal Reserve will start to slow its monetary policies. Retreats of the major averages sent the CBOE Volatility Index to its highest level since early July as investors scrambled to buy protection.

Crude oil and gold prices moved solidly higher in the midst of the geopolitical unease, and Treasuries gained ground. Concerns over possible supply interruptions helped crude oil end at its highest level in more than a year, climbing 2.8% to $108.84 per barrel. While most cyclical sectors ended behind the broader market, the energy space outperformed with a loss of 0.6% as the surge in crude contributed to the sector’s strength.

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Stocks Dive After Kerry Blasts Syria

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

After spending most of the day in positive territory, U.S. equities lost steam in the final hour of trading to end mostly lower, halting two days of gains, after U.S. Secretary of State John Kerry called Syria’s use of chemical weapons “undeniable.”

Once again, a larger-than-expected decline in July’s durable goods orders report did little to sooth anxiety that asset tapering by the Federal Reserve may begin soon. The major averages held modest gains into the final hour of the session when comments from Secretary of State John Kerry regarding the situation in Syria contributed to broad-based selling.

Kerry told reporters that Syrian President Bashar al-Assad’s regime was responsible for last week’s attack that the opposition blames for more than 1,300 deaths. The S&P 500 spiked lower following the statements after earlier extending its first weekly gain since Aug. 2. The comments injected a bit of uncertainty and the CBOE Volatility Index jumped to a session high as downside protection received an afternoon surge in interest.

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ETFs/Mutual Funds On The Cutline – Updated Through 8/23/2013

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 300 (last week 303) 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. 54 ETFs (last week 55) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 779 (last week 779) above the line and 80 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: Could The Fed Increase Asset Purchases To Bring Down Yields?

Ulli Market Review Contact

92835431Following the release of the Fed’s latest FOMC minutes, the bond markets have witnessed violent movements with prices plummeting and yields shooting up. People have pressed the panic button a little too early and may have jumped too far, feels David Blanchflower, economics professor at the Dartmouth College and a former policy maker at the Bank of England.

If the Fed was ready to start tapering, they would have gone ahead and announced that in the last meeting. The Fed’s move will be “path dependent” and the policymakers are going to wait and see. It’s unlikely the taper issue will be resolved by the September meeting, given the way the minutes read.

Taper is surely going to come, but the big question is when? Also, it’s not clear which of the assets the Fed would stop buying, i.e. the mortgage-backed securities (MBS), Treasuries or bonds, Dave observed.

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