Indexes Slip On Manufacturing Data; Treasuries Advance To Almost 4-Week High

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

US equity markets started the second quarter on a cautious note, with two benchmark indexes retreating from record highs, after a closely watched manufacturing index declined unexpectedly in March.

The Tempe, Arizona-based Institute for Supply Management’s factory index fell to 51.3 in March from 54.2 in February. Any reading above 50 signals expansion. At the same time, the new-orders index, a gauge of future demand, fell to 51.4 from 57.8 in February.  The production index dropped 5.4 percent to 52.2. The loss of momentum in sales and production could be an indication of an economic slowdown in the second quarter.

Economists expect growth to slow to 2.2 percent from an estimated 2.8 percent in the first quarter.

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ETFs/Mutual Funds On The Cutline – Updated Through 3/28/2013

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 349 (last week 343) 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. 75 ETFs (last week 70) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 812 (last week 815) above the line and 47 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 3/31/2013

Ulli Market Review Contact

In case you missed it, here’s a summary of the ETF topics and market reviews I posted to my blog during the week ending on 3/31/2013.

Despite the uncertainty and questionable outcome of the Cyprus debacle, the US markets only took a short breather before continuing their relentless match towards higher milestones. The S&P 500 finally hit pay dirt on Thursday by taking out its 2007 all-time high.
What that means is that if you were unfortunate enough to have bought the index on that day in 2007, you have now, 6 years later, finally broken even. Congratulations!

With the Fed continuing the monetization of our debt at the rate of $85 billion a month, with no indication of slowing down, some of that money finds a new home in the stock market acting as the driver to push these indexes towards “out of touch with reality” levels.

Eventually, this market orgy will end, but the timing of it is still unknown. In the meantime, we will continue holding our positions in low volatility ETFs subject to our trailing sell stop discipline, which will take us out of the market when a trend reversal finally makes an appearance.

As an aside, in terms of ETFs, low volatility does not equate with sub-par performance. There are several that have outperformed the indexes YTD by a considerable margin.

Over past week, we covered the following:

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One Man’s Opinion: Have Asset Bubbles Been Formed Already?

Ulli Market Commentary Contact

92835431Asset markets are elevated because monetary policies are very active, says Ben Emons, Senior Vice President at PIMCO. Take last week. The Federal Reserve came out with a statement, which was very similar to previous statements and very much indicative that quantitative easing by far is not over.

Similarly, if we look forward to next week, the comments coming from the new governor indicates the Bank of Japan is willing to do a lot more easing, much more experimental easing perhaps. That’s what the markets want – the additional liquidity that flows through the markets and the economy, and that makes the markets feel bubbly, he noted.

Asked when the asset-bubbles will correct themselves, Ben said that’s very hard to say because for one, it needs to be determined if bubbles have really formed or if economies are healing and the asset prices are moving well ahead of the curve. It is also possible that because of the excess liquidity, people are putting more money in the bond and the stock markets.

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New ETFs On The Block: Market Vectors Treasury-Hedged High Yield Bond ETF (THHY)

Ulli Income ETFs Contact

156288184Van Eck Global, the New York-based fund provider behind the Market Vectors ETFs, has rolled out the Market Vectors Treasury-Hedged High Yield Bond ETF (THHY). The fund seeks to exploit the income potential of below investment-grade US corporate bonds in low interest-rate environments, but hedges the interest rate risk through the use of Treasury notes. In other words, it’s an attempt to give a purer exposure to credit risk while hedging interest rate risk.

THHY follows the Market Vectors US Treasury-Hedged High Yield Bond Index (MVTHHY), an in-house index that follows a long-short strategy and invests in dollar-denominated, junk corporate bonds, while shorting Treasury notes to hedge against adverse interest rate movements.

Since bond yields and prices move in opposite directions, if interest rates rise back to normal levels, price of high-yield “junk” bonds will fall while profits from the short position in Treasuries will rise, thus offsetting the price decline in junk bonds.

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ETF/No Load Fund Tracker Newsletter For Friday, March 29, 2013

Ulli ETF Tracker Contact

ETF/No Load Fund Tracker StatSheet

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

https://theetfbully.com/2013/03/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-03282013/

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Market Commentary

Friday, March 29, 2013

S&P 500, DOW HIT RECORD HIGHS ON GDP DATA; EUROPE STOCKS UP FOR A SECOND MONTH

US stock indexes closed higher, wrapping up a strong first quarter Thursday with the S&P 500 and the Dow industrials finishing at a new high as US economic expansion slowed less than previously estimated and worries over Europe’s debt crisis abated.

Equities gained after the open as a revised Commerce Department report in Washington showed gross domestic product rose at a 0.4 percent annual clip in the final three months of 2012, up from a 0.1 percent previous estimate and following a 3.1 percent pace in the third quarter.

However, on a downbeat note, first-time jobless claims climbed by 16,000 to 357,000 in the week ended March 23, the highest in over a month.

And, a gauge of business activity in the Chicago region came in worse than expected. The Purchasing Managers Index dropped to 52.4 percent in March as new orders, order backlogs and inventories suffered setbacks. Economists had predicted a reading above 56 though any reading above 50 indicates expansion.

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