Fed Pushes Jelly Back In The Donut—SPX Rallies To New Record

Ulli Market Commentary Contact

Thur pic

[Chart courtesy of MarketWatch.com]

A day after Chairman Ben Bernanke said the Federal Reserve will keep a loose monetary policy for some time to lower the unemployment rate, U.S. equity markets advanced to record highs at the close of Thursday’s session. Apparently, we must have misunderstood Bernanke’s previous remarks of tapering, as he has now successfully pushed the jelly back in the donut.

The S&P 500 index topped the closing record of 1,669.16 reached May 21, erasing losses since Bernanke first suggested the Fed might curb stimulus this year. The Dow Jones Industrial Average also jumped to a record close. More than 85 percent of shares on the New York Stock Exchange and almost 70 percent of those on the Nasdaq rose on Thursday. All 10 of the S&P 500 industry sectors advanced, with five of them rising more than 1.5 percent.

In economic news, jobless claims surprisingly rose above the key level of 350,000 and import prices unexpectedly declined. Data today showed the number of Americans filing for unemployment benefits unexpectedly increased to a two-month high. Swings in jobless applications are typical in July as auto plants close for annual retooling. The Labor Department last week released its jobs report for the month of June, showing the economy added 195,000 jobs, exceeding estimates, while the unemployment rate was unchanged at 7.6 percent. Additionally, equities found support from overseas, as the Bank of Japan issued an upgraded economic outlook, while hopes regarding the prospect of further Chinese economic stimulus continued to rise.

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Volatile Session Thanks To Fed’s Minutes

Ulli Market Commentary Contact

Wed pic

[Chart courtesy of MarketWatch.com]

U.S. equity indexes ended this volatile session on a mixed note, after the release of the minutes from the Federal Reserve’s June policy meeting created uncertainty over when and if the central bank will start to trim the stimulus.

Attention shifted to focus on the speech by Chairman Ben Bernanke to begin after the closing bell. The Chairman says the U.S. economy still needs help from the Fed’ low interest rate policies, and because unemployment remains high and inflation is below the Fed’s target, the policies are still necessary. However, just like the Fed’s minutes, Bernanke failed to signal any changes in the bond-buying program during his remarks.

On the markets, energy and financials displayed weakness throughout the day before settling near their lows. The energy sector shed 0.6% despite the continued rise in crude oil, which added 2.4% to $106.04 per barrel. The energy component has rallied steadily since late June, and reports of a well leak off the coast of Louisiana contributed to today’s strength.

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7 ETF Model Portfolios You Can Use – Updated through 7/9/2013

Ulli Model ETF Portfolios Contact

Anticipation, that the much lowered earnings bar will lead to better than expected results, as earnings season gets underway, along with lessened fears about the Fed’s potential tapering efforts, pushed the major market indexes higher.

Since last week’s ETF Model Portfolio report, the S&P 500 gained some 2.35% as risk seems to be back on. It’s interesting to note that during the first 6 months of this year, the widely diversified models underperformed severely, along with those invested in bond ETFs, while the simpler models (#2 and #5) showed some decent gains.

Yes, with the benefit of hindsight, this year for sure rewarded those invested in either the major equity indexes or simply only in SPY, as described in my latest e-book “How to beat the S&P 500…with the S&P 500,” which you can download here.

Here’s the latest ETF Model Portfolio update:

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Major Index ETFs Hit Four In A Row Ahead Of Fed’s Minutes

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

U.S. equities moved higher for a fourth-consecutive day on Tuesday amid optimism companies will report better-than-forecast earnings for the second quarter after Dow member Alcoa bested the Street’s earnings forecasts. Investors are betting that companies will be able to surpass the low bar set for earnings season, leaving room for better-than-expected results that could drive the rally further.

The S&P 500 has recovered all its losses following a 4.8 percent drop between June 19 and 24. The push higher in recent days has taken the benchmark to 1 percent below its all-time closing high of 1,669.16 reached on May 21, the day before Bernanke told Congress the Fed could taper purchases.

Stocks advanced today despite an unexpected decline in small business confidence. The National Federation of Independent Business Small Business Optimism Index deteriorated in June, pulling back from the highest level in a year, declining to 93.5, compared to the improvement to 94.9 that economists had expected.

Hiring plans for the next three months, however, picked up to the best level since last August. Its six-month average also advanced, which suggests the unemployment rate could decline further this summer. Of course, the creation of part-time jobs will likely accelerate at the expense of full time employment as the difference between quantity and quality becomes ever so obvious.

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Bulls In Charge For 3rd Day—S&P 500 Nears All Time High

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

U.S. equities began today on a positive note, as last week’s upbeat U.S. labor report along with the start of corporate earnings season fueled increased optimism about growth in the world’s largest economy. It helped ease concerns about rising interest rates and the increased likelihood that the Fed will begin tapering its asset purchases. Stocks registered the bulk of their gains in the opening minutes and pushed the S&P 500 closer to its all-time high set in May.

The upbeat open was aided by a strong showing in Europe where major averages overlooked disappointing German industrial production data and rallied on indications the next tranche of Greek aid will be approved by Eurozone officials. However, stocks in Asia finished broadly lower. Concerns about Chinese economic growth ahead of this week’s release of a plethora of key reports for June may have kept sentiment in check, as well as some caution before the start of earnings season in the U.S.

Today’s economic calendar was light. Consumer credit, released in the final hour of trading, showed consumer borrowing expanded by $19.62 billion during May, the fastest pace in a year and more than the $12.50 billion forecast of economists, while April’s figure was adjusted downward to an increase of $10.87 billion from the originally reported $11.06 billion. Treasuries finished higher with interest rates pulling back from their recent rally, while showing little reaction to the consumer credit report. How about stocks?

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ETFs/Mutual Funds On The Cutline – Updated Through 7/5/2013

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 263 (last week 263) 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. 42 ETFs (last week 43) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 756 (last week 749) above the line and 103 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.