Equity Indexes Retreat, But Notch Strong January; Europe Edges Lower

Ulli Market Commentary Contact

Thur pic

[Chart courtesy of MarketWatch.com]

Equity ETFs finished lower Thursday, ending a blockbuster month on a soft note after a government report showed jobless claims rose, but the Dow Jones Industrial Average still managed to produce the best January rally since 1994.

First time claims for unemployment benefits climbed 38,000 to 368,000 last week, the first rise in two weeks, a Labor Department report showed. The weekly data comes ahead of tomorrow’s all-important nonfarm-payrolls number for January.

Separately, a Commerce Department report showed consumer spending rose by 0.2 percent while personal income jumped 2.6 percent in January, boosted by early dividend payments. The Chicago-area Purchasing Manager’s Index rose to 55.6 in January, the highest level since April 2012, from an upwardly revised 50 level.

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GDP Experiences Shrinkage; Stocks Retreat On Growth Worries; Europe Falls After US Economic Data

Ulli Market Commentary Contact

Wed pic

[Chart courtesy of MarketWatch.com]

US equities finished lower Wednesday, dragging the index averages off five-year highs after the Federal Reserve said economic growth had paused following the release of a government report that showed the US economy contracted in the fourth quarter.

The Federal Open Market Committee kept interest rates unchanged at near zero and maintained its aggressive bond-buying program. The central bank said it will keep purchasing bonds at the rate of $85 billion a month after concluding its two-day policy-setting meeting today.

Earlier in the day, the Commerce Department said the economy contracted at a 0.1 percent annual pace in the final quarter of last year, falling short of the 1 percent growth projected by economists.

Gross Domestic Product, the aggregate of all goods and services produced, fell to its lowest level since the second quarter of 2009, when the economy was still in recession. Today’s report, however, contained a few bright spots such as an uptick in business investment, consumer spending and home building, suggesting the pause was probably due to bad weather and other transitory factors, and the underlying economy possibly grew at around 2 percent, if you can believe this type of Main Stream Media spin.

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7 ETF Model Portfolios You Can Use – Updated through 1/29/2013

Ulli Model ETF Portfolios Contact

More of the same was the motto for this past week as the S&P 500 added about 1% and clearly pierced its 1,500 milestone marker to the upside.

Bad news, good news or no news; it does not really matter; the indexes are being pushed up without regards to any economic reality, which is the hallmark of the central planning efforts.

Sure, it’s really tempting to throw caution to the wind by exposing your portfolio to 100% equities to take advantage of the relentless upswing. However, since upward momentum is being artificially created, there will be a point of reckoning when index levels and fundamentals finally meet. That may be the moment when the ensuing trend reversal could accelerate into something really fearsome.

That’s why the wiser choice is to keep your portfolio mix between equities and bonds alive which, when combined with my recommended sell stop discipline, will at least give you a fighting chance to preserve your capital once the inevitable downturn strikes.

Here’s the latest update for our Model ETF Portfolios:

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Up, Up And Away; Dow Hits 2007 High; Europe Touches 23-Month High

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

Equity ETFs mostly advanced today with the Dow Jones Industrial Average hitting a five-year high after data released showed continued improvement in housing and companies including Pfizer and Valero Energy reported earnings that beat estimates.

The indexes picked up pace and rallied as the S&P/Case-Shiller index of US property values rose 5.5 percent in November after rising a downwardly revised 4.2 percent in the preceding month to post the biggest year-on-year gain since 2006.

On the downside, the Conference Board’s index of consumer confidence declined to 58.6, the least since 58.6 November 2011 and well short of the 64 forecast by Bloomberg.

Tuesday also marked the start of US Fed’s first monetary policy meeting of the year. After the conclusion of the two-day meeting on Wednesday afternoon, investors will look for clues in the Federal Open Market Committee’s statement for when the bond buying program may end.

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S&P 500 Clings To 1,500 Level As Housing Disappoints; Europe Mixed

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

US equity indexes mostly finished lower with the S&P 500 snapping its longest rally since 2004 as a decline in pending home sales offset a rise in durable-goods orders while investors seemed reluctant to make fresh purchases after four weeks of gains.

The Commerce department said orders for durable goods rose 4.6 percent in December after a paltry 0.7 percent gain in the previous month. Stocks however, gave up the gains after a report by the National Association of Realtors showed pending home sales dropped 4.3 percent last month.

Caterpillar rose two percent after the equipment maker forecast stronger growth in the second half of the year while fourth-quarter profit sank 55 percent due to write-down.

The S&P 500 Index (SPX) slipped 3 points to end at 1500 with materials hitting the ground hardest and technology gaining the most among its 10 business groups.

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ETFs/Mutual Funds On The Cutline – Updated Through 1/25/2013

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 371 (last week 373) 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. 85 ETFs (last week 87) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 804 (last week 787) above the line and 55 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.