Index ETFs See Red On Continued Fed Fear

Ulli Market Commentary Contact

Thur pic

[Chart courtesy of MarketWatch.com]

The U.S. equity markets extended yesterday’s selloff to close decisively lower, the most since June as forecasts from Cisco Systems Inc. and Wal-Mart Stores Inc. disappointed while a large dose of mixed domestic data added to investor worries that the Federal Reserve may begin tapering in the near future.

About 6.6 billion shares exchanged hands on U.S. exchanges today, 4.5 percent above the three-month average, while The CBOE Volatility index rose nearly 12 percent. Treasury yields rose to the highest levels in two years.

All 10 major industries in the S&P 500 retreated, with seven of ten groups posting losses larger than 1.0% while, energy (-0.7%), materials (-0.8%), and telecom services (-0.9%) outperformed. Technology and consumer-discretionary shares dropped more than 1.7 percent after Wal-Mart’s shares fell on a surprise decline in quarterly same-store sales and Cisco Systems shares slipped one day after the network equipment maker announced it was cutting 4,000 jobs.

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Fed Tapering Haunts Markets Again

Ulli Market Commentary Contact

Wed pic

[Chart courtesy of MarketWatch.com]

Domestic equity markets continued the recent downward trend with trading volumes about 22 percent below the 100-day average. Earnings season is winding down and economic indicators present a mixed view, complicating predictions of the Fed’s next policy action.

Mixed economic data has led to heightened anxiety that the Federal Reserve may begin to taper its asset purchase program this year, possibly as early as September. Equities were confined to a downtrend from the open, and even the news of the first expansionary Eurozone GDP reading in 18 months could not spark a bid.

Nine of ten sectors registered losses while technology posted a fractional gain of 0.01%. The tech sector climbed into the lead early this afternoon. The relative strength of the largest sector component overshadowed the underperformance of chipmakers. While technology was able to end in the green, the materials sector shed 0.2% after spending the majority of the session in positive territory.

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7 ETF Model Portfolios You Can Use – Updated through 8/13/2013

Ulli Model ETF Portfolios Contact

After conquering the 1,700 marker for the S&P 500, we slipped again below it and meandered aimlessly for most of the week. The S&P 500 gave back 3 points since last week’s portfolio report.

This sideways pattern does not surprise me as earnings season has come to an end and recent economic reports have not been overpowering in content, so a new driver is needed to push the index back above the 1,700 level.

Taper talk has been mainly neutral and, absent any major news event, we may very well spend the last couple weeks of summer drifting within a narrow range.

Here’s the latest ETF Model Portfolio update:

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Major Market ETFs Finally Halt Multi-Day Slide

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

U.S. equities finished strong in a volatile session on Tuesday, as investors weighed a lackluster domestic retail sales report and tepid small business optimism with better-than-expected reports from across the Atlantic.

Treasuries finished lower following the US data; gold saw pressure, while crude oil prices and the US dollar moved higher. Below-average volume has persisted through August, and today did not deviate from the recent norm as only about 5.6 billion shares changed hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, which is below the daily average so far this year of about 6.3 billion shares. The Standard & Poor’s 500 Index incurred another morning losses for a ninth consecutive day. The rebound in the S&P was aided by the relative strength of most cyclical groups.

The tech sector spiked during afternoon action after activist investor Carl Icahn disclosed what he described as a “large” position in Apple. The largest tech stock advanced 4.8% while the broader sector added 0.8%. While most cyclical sectors posted solid gains, discretionary shares ended flat. Home builders registered losses across the board.

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Slippage Continues

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

The major market ETFs began the trading week in limbo, giving the Standard & Poor’s 500 Index its fifth drop in six sessions, as an empty economic calendar and news on the equity front failed to inspire investors.

A weak read on 2Q GDP out of Japan became a little dark cloud early on, as markets across the Atlantic were also unable to find direction, while equity and economic news from abroad was also in short supply. Trading volume was light, marking one of the five days this year with fewer than 5 billion shares traded over a full session. Earnings period is drawing to a close as the market enters the seasonally slow period.

Today’s economic data was limited to wholesale inventories which fell 0.2% in June, contrary to expectations for a 0.5% gain. The decline was the third in row, resulting in 1.7% annualized drop in Q2. This suggests the inventory investment contribution to GDP would likely be revised lower, as wholesale inventories account for about 1/3 of total inventories.

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ETFs/Mutual Funds On The Cutline – Updated Through 8/9/2013

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 302 (last week 301) 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. 56 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 790 (last week 664) above the line and 69 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.