7 ETF Model Portfolios You Can Use – Updated through 8/20/2013

Ulli Model ETF Portfolios Contact

The market pullback continued as fears about the Fed’s potential tapering remained the number one concern on Wall Street. The S&P 500 gave back -2.48% since last week’s ETF model portfolio report.

It’s been an unusual year in that bonds have failed to balance out portfolios during those times when equities are in retreat mode. It’s not really a great surprise as interest rates had only one way to go, and that is up, after having reached manipulated all-time lows.

Also, widely diversified portfolios have not performed well but those with only a few funds, like our #5, have done ok, while some of the index ETFs took the spotlight. Most investors are over diversified, which reminds me of Warren Buffett’s saying that “wide diversification is only required when investors do not understand what they are doing.”

Here’s the latest ETF Model Portfolio update:

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Stocks Finally See Green Ahead Of Fed Minutes

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

While the broader market and the Nasdaq finished with gains to snap a four-day losing streak, blue chips spent most of the day in positive territory, but took a nosedive in the last half-hour of trading to end lower.

Retailers’ results surpassed estimates and investors awaited signals on stimulus measures from the Federal Reserve. Dow member Home Depot bested the Street’s estimates and guided higher, TJX Company’s results were above projections, and Best Buy Co easily exceeded analysts’ forecasts, while J. C. Penney posted a wider-than-expected loss despite posting sequentially improved same-store sales.

A retreat in Treasury yields contributed to the relative strength of equities as the benchmark 10-yr yield fell seven basis points to 2.82%. The pullback in yields helped rate-sensitive sectors such as telecom services (+0.5%), utilities (+0.8%), and home builders. The relative strength of home builders provided a measure of support to the discretionary sector, which ended atop the leaderboard.

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Week Starts off on Fourth Straight Loss

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

The above picture is worth a thousand words. U.S. equity markets closed in negative territory for the fourth-straight session to start the week off on a sour note, after energy shares dropped and Treasury yields again jumped to a two-year high.

Today marked the first occurrence of a 4-day losing streak for both the S&P 500 Index and Dow this year. The Nasdaq was positive for most of the session, spurred by gains in technology shares, such as Apple and Google, before selling pressure in the last hour of trading turned the index negative. Investors are eagerly awaiting the mid-week release of the minutes from the most recent Federal Open Market Committee meeting.

While today’s economic calendar did not provide anything for traders to mull, the rest of the week will offer some insight into the health of the economy, headlined by the minutes from the Fed, likely keeping the timing and pace of Fed tapering and the prospect for rising interest rates in the bond market on center stage.

Some analysts believe the economy appears on the rebound, but neither hot enough to force the Fed’s hand nor cold enough to engender recession fears. However, given elevated market sentiment, seasonal tendencies and some technical deterioration within the stock market, many believe the market has become vulnerable to a pullback.

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ETFs/Mutual Funds On The Cutline – Updated Through 8/16/2013

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 303 (last week 302) 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. 55 ETFs (last week 56) 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 790) 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.

One Man’s Opinion: Is A Continuation Of The Stock Market Rally Linked To Fed Stimulus?

Ulli Market Review Contact

92835431When the S&P 500 first hit the 1,700 mark, it was evident the market is going to enter a trade range for the rest of the year, says Jim Paulsen, chief investment strategist at Wells Capital Management.

The market is going to digest three really big things now. First, will be digesting the big move it already had since last fall. There had been a 3x multiple increase (since last fall) in prices, the biggest multiple increase in this recovery in stocks, and the markets are kind of adjusting to higher valuations.

Secondly, the markets had to adjust to a significant reprising in long-term interest rates, which is still in progress and is likely to go to three percent or a little more by the year-end. Finally, the markets have to digest tapering, which is going to start by the end of this year. However, none of these events are likely to end the bull market, but investors are going to get frustrated for the next several months, maybe the rest of this year before they regain some confidence in 2014, Jim said.

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New ETFs On The Block: Global X MLP & Energy Infrastructure ETF (MLPX)

Ulli Master Limited Partnerhips Contact

139868600Global X Funds, the New York-based issuer of exchange-traded funds has launched a master limited partnership or MLP product that seeks to take the tax-bite away generally associated with the C-corporation structure. The Global X MLP and Energy Infrastructure fund (MLPX) is designed as a Regulated Investment Company and is suitable for investors seeking to maximize capital appreciation and tax-deferred income.

This is the third MLP product from the fund group and scores over its April 2012 launch, the Global X MLP ETF (MLPA), since MLPA is structured as a C-Corp fund. Deferred tax liabilities impact the returns of C-Corp funds, resulting in much higher expenses for investors.

As the economy allegedly starts to look up, newer pipeline and midstream firms are likely to use this corporate structure to take advantage of the tax savings, given the rising demand for energy. Further benefit is expected to accrue from the industry’s toll-road business model as revenues are directly correlated with volume transported as opposed to commodity prices. Also, a report by the International Energy Agency forecasts the US will become the largest exporter of oil by 2017.

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