The equity rebound continued into the New Year with the S&P 500 gaining some 2% as relief over the watered down fiscal cliff solution translated into reckless support for stocks.
I have rebalanced all ETF Model Portfolios as of 12/31/12, since ‘Buy’ signals were still in effect at that time. The #6 Ivy Portfolio was replaced with a new Bond ETF portfolio, as many readers had requested.
Here’s the latest update for the first week of 2013:
US equities extended modest losses into a second straight session as investors braced for the start of corporate earnings season. I did not know that two down days in a row were still permitted in this centrally planned economy, but I stand to be corrected…
In economic news, US consumers expanded their debt to $16.1 billion in November, raising credit at an annual clip of seven percent, a Federal Reserve report showed in Washington. Credit had grown by $14.2 billion in October.
Separately, the small business optimism index edged higher in December, the National Federation of Independent Business said Tuesday. The latest reading is still the second-worst since March 2010.
US stocks fell Monday with the S&P 500 index coming off a five-year high as Wall Street shifted its focus from the nation’s fiscal woes to the start of corporate earnings season tomorrow.
Aluminum maker Aloca Inc will unofficially kick-off the fourth-quarter earnings season after the market closes on Tuesday. Fourth quarter earnings for S&P 500 companies are expected to rise 2.8 percent compared with the same period in 2011, according to Thomson Reuters data.
Meanwhile Republicans in Washington linked raising the US debt-ceiling to reduced spending on entitlement programs including Medicare, while Democrats looked for additional revenue. That will shape up to be a hard fought battle.
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 362 (last week 300) 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. 84 ETFs (last week 71) have managed to remain in bullish territory after the recent market volatility.
The third report covers Mutual Funds on the Cutline. There are currently 771 (last week 562) above the line and 88 below it out of the 859 that I follow.
Take a look:
2. ETF High Volume Cutline Report
In case you are not familiar with some of the terminology used in the reports, please read the Glossary of Terms.
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 1/6/2013.
With the cliff relief rally spilling over into the New Year, you have to wonder how long economic reality can be simply ignored. The S&P 500 scored some 4.5% for the week, as the Fed continues with its asset purchase plan, which creates about $85 billion a month.
A lot of this money finds a new home in the risk markets but with the next cliff, AKA debt ceiling debacle, looming, severe market volatility will certainly be part of those upcoming negotiations.
I think it’s wise to continue holding a balanced portfolio and not be exposed to just the whims of the equity markets. Unless I am dead wrong, the pace of this current pump fest, which started after election lows in November, can simply not be maintained.
Over past week, we covered the following:
The latest non-farm payroll data shows the US economy added 155,000 jobs in December, and the unemployment rate remained unchanged at 7.8 percent, well short of the Fed’s stated target of 6.5 percent, which in turn will likely keep the central bank engaged in the foreseeable future.
Does the present administration have any number that relates to job losses if one of the worst-case scenarios, say sequestration kicks in in near future?
The government has said in the past that if middle-class tax-cuts were not extended, we would see a substantial hit to the economy, said Alan Krueger, chairman of the White House Council of Economic Advisers. Congress made substantial progress earlier in the week with the “tax pay relief” act, and middle-class families would not see a tax increase starting January 4, while those on long-term unemployment benefits will continue to receive those benefits, he added.
Substantial progress has been made on budget-deficit reduction as well; more than $737 billion in deficit-reduction over the next 10 years has been agreed upon. So overall significant progress has been made and if there had been no progress, the rise in taxes on the middle-class would have had a severe hit to the economy early in 2013, he noted.