Rising Bond Yields Take Down The Bulls

Ulli Market Commentary Contact

Wed pic

[Chart courtesy of MarketWatch.com]

Despite a strong spate of earnings and merger news, U.S. equities gave back a large portion of yesterday’s gains. Stocks backed off today as high-yielding dividend stocks lost some of their luster after recent increases in U.S. Treasury bond yields.

Equities slipped out of the gate as sellers drove the major averages to their lows 90 minutes into the session. This marked the return of bargain hunters, who helped the Standard & Poor’s 500 Index return to its opening levels.

However, the relative weakness of several influential groups kept the benchmark average from regaining its flat line. The Dow Jones Industrial Average lost 107 points (0.7%) to 15,303, the S&P 500 Index declined 12 points (0.7%) to 1,648, and the Nasdaq Composite descended 21 points (0.6%) to 3,467.

Indexes made up of consumer staples, health care, telecommunications and utilities shares all ended with losses larger than 1.5%. The defensive sectors have led the gains in this year’s market rally as investors favored high-dividend stocks over fixed-income securities in a low interest-rate environment.

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7 ETF Model Portfolios You Can Use – Updated through 5/28/2013

Ulli Model ETF Portfolios Contact

Downward momentum accelerated last week with the major indexes all ending in the loss column. The S&P 500 gave back some 0.53% since last week’s ETF Model Portfolio report was issued. It could have been a lot worse, but strong consumer confidence data pushed the dip buying crowd back into the market yesterday.

However, it wasn’t enough to make up for last week’s pullback, which affected all portfolios negatively. Even bond ETFs seem to be bouncing off a glass ceiling as fear of higher interest rates down the line has many of them heading closer to their trailing sell stops.

Remember to adjust your sell stops for the amount of dividends paid; otherwise you might be selling a bond ETF before its time. I will make the “high price” adjustments in the Sell Stop Tracking column as time goes on and will then enter the paid dividends as well.

Here’s the latest ETF Model Portfolio update:

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Bulls Climb Higher In Full Throttle

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

Following a long holiday weekend, the U.S. Index ETFs rallied on Tuesday to push the stock market to record highs this year. After last week’s pullback, dipbuyers came back to life for the trading session in the wake of stronger-than-expected readings on housing prices and consumer sentiment.

Stocks trimmed a considerable portion off their highs but were able to post solid gains. The Dow Jones Industrial Average logged its 20th consecutive advance on a Tuesday. The Dow rose 106 points (0.7%) to 15,409 to close at another record, bouncing back from a loss the week before. The Standard & Poor’s 500 Index gained 10 points (0.6%) to 1,660, and the Nasdaq Composite increased 30 points (0.9%) to 3,489.

The big news of the day that gave the markets direction was the release of The Conference Board’s Consumer Confidence Index. The reading rose 7.2 points in May to 76.2, the highest level since February 2008, and above the consensus of 72.0. Over the last two months, confidence has gained 14.3 points, the biggest back-to-back increase since December 2011.

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ETFs/Mutual Funds On The Cutline – Updated Through 5/24/2013

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 326 (last week 341) 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. 63 ETFs (last week 69) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 818 (last week 826) above the line and 41 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 5/26/2013

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 5/26/2013.

Thanks to the Fed’s confusing messages, in part by Bernanke and in part by different Fed presidents, the markets decided that it was time to face the reality of possible tapering off of the QE programs in the not too distant future.

As a result, the major indexes closed the week down, but off their lows, with the S&P 500 surrendering about 1%. It now remains to be seen if next week the dip buyers show up again to take advantage of lower prices so that relentless and euphoric bullishness can be restored.

It may very well happen until, one day, it doesn’t; and the party comes to an end. That’s why I keep harping on you having an exit strategy in place. You may not need it for a while, but you’ll be glad you did once the day of reckoning arrives.

Over past week, we covered the following:

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One Man’s Opinion: Was Bernanke’s Congressional Testimony More Of The Same?

Ulli Market Commentary Contact

92835431Markets reacted sharply earlier this week after Federal Reserve Chairman Ben Bernanke’s latest Congressional testimony revealed the central bank discussed starting to taper its bond purchase program at the latest FOMC meeting.

But Heather Loomis, executive director of fixed income at JP Morgan Private Bank, feels Bernanke’s statement was very balanced, and the volatile reaction from the bond and the stock markets was more of a function of the markets grasping for some news and trying to read into both the prepared remarks and the Q&A. What Bernanke really said was more of the same – that we are going to be watching the data, that we have seen improvement, but we have yet still more improvement to see, she observed.

Asked if comments by the different Fed presidents added to the noise, Heather answered in the affirmative. Comments by the various Federal Reserve Bank presidents have not lent additional clarity to Bernanke’s statements, they probably added additional confusion. But if one could summarize the direction of them, it’s that: “we are watching this data closely”.

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