Stocks Close Mostly Lower, But Dow Hits Record; European Stocks End Flat

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

US stocks closed mostly lower Tuesday as the S&P 500 snapped a seven day winning spree, but the blue-chip Dow Industrials staged a late-session turnaround to finish at a record high for the sixth straight day.

Meanwhile, amid the continuing saga of Washington’s budget wars, House Republicans introduced a plan to cut the deficit to $528 billion in fiscal 2014 and then to $69 billion by 2016. The budget proposal released by House Budget Committee Chairman Paul Ryan Tuesday kicked off a debate that is expected to bring a 10-year budget proposal from senate Democrats on Wednesday.

After rising 31 points and falling 35, the Dow Jones Industrial Average (DJIA) finished 3 points higher at 14,450, marking its sixth consecutive closing high and eighth gain in as many sessions, the longest streak since Feb 9, 2011.

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Index ETFs Continue Record Run As S&P Nears Record High; Europe Eases On Italy

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

US indexes continued their record run Monday with the S&P 500 rising within nine points of the all-time high, while a gauge of market volatility slipping to the lowest level in six years as banks rallied and Apple Inc gained.

Stocks tumbled earlier after National Bureau of Statistics data showed Chinese industrial output grew 9.9 percent from a year earlier in the first two months of the year while retail sales gained 12.3 percent, both falling short of expectations. Consumer inflation rose 3.2 percent in February, up from 2 percent in January and the highest increase since April last year.

The CBOE Volatility Index, known as the VIX, shed 8.2 percent to 11.56, the lowest since February 2007.

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ETFs/Mutual Funds On The Cutline – Updated Through 3/8/2013

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 354 (last week 344) 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. 79 ETFs (last week 72) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 817 (last week 803) above the line and 42 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 3/10/2013

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 3/10/2013.

Upward momentum picked up speed again, as the benchmark S&P 500 index gained every day this week for a total of +2.17% since last Friday’s close.

Bond prices have been slipping, meaning rates have been inching up on the idea that the economy is improving. The Fed’s beige book report provided no earth shattering news, but it has become clear that the Fed, despite recent questionable remarks, has in no way admitted that the QE gravy train may be slowing down. I think their recent comments were merely designed to test market response, kind of like a canary in the coal mine, in the event the monthly $85 billion money spigot would be slowed down.

In my view, the Fed is stuck between a rock and a hard place. They eventually will have to stop the print fest, but if they do too soon, the markets will tank. In the meantime, adding $85 billion a month will support the major indexes if for no other reason that money needs to find a home. One analyst quipped that “in 2013 we may see the S&P 500 go above 2,013.”

Over past week, we covered the following:

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One Man’s Opinion: Will Sequestration Hurt Job Creation And Temper Growth?

Ulli Market Commentary Contact

151546377Friday’s nonfarm payrolls number certainly comes as a welcome break for investors who have been worried that the Fed’s ultra loose monetary policy has failed to stimulate the real economy.

However, the pace of recovery is likely to slow down, says Alan Krueger, chairman of the White House Council of Economic Advisers, adding the so-called sequestration is going to hurt just when economic recovery is gaining traction. Sequestration is going to make some important spending-cuts which are going to hurt investment and people, and will ultimately slow economic growth and job creation, which is why President Obama had suggested a balanced approach of reducing the budget deficit by closing tax loopholes, reforming entitlements and smarter entitlement cuts, he argued.

Asked to assess the impact of sequestration on jobs growth, Alan said there are number of estimates out there. The Congressional Budget Office expects the GDP growth to slow down by 0.6 percent and reduce employment by three quarters of a million jobs, which turns out about 75,000 jobs every month because the sequester starts from March, so there’s just ten months for rest of the year.

When prodded to give his own calculations, Alan said the CBO’s forecast seems to be a reasonable estimate to him.

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New ETFs On The Block: First Trust High Yield Long/Short ETF (HYLS)

Ulli Long/Short ETFs Contact

88338768First Trust Advisors, the Illinois-based provider of exchange traded funds (ETFs), has unveiled the First Trust High Yield Long/Short ETF (HYLS), an actively managed high-yield bond ETF designed to provide investors with capital appreciation and current income.

Investors worried about an interest rate hike later this year or next year, can consider this product for hedge against interest rate risk. Furthermore, due to the low historical correlation between high-yield securities and traditional fixed-income instruments, addition of high-yield securities to a well-diversified portfolio may lower overall risk and improve returns.

HYLS tracks the Bank of America Merrill Lynch US High Yield Master II Constrained Index and invests primarily in a diversified portfolio of below investment-grade or unrated debt securities, including US and non-US high-yield bonds, bank loans and convertible bonds.

The fund will invest at least 80 percent of net assets in junk securities. Additionally, it may invest up to 10 percent of net assets in non-US securities in non-US dollar denominated currencies. HYLS can also invest in non-income producing securities including distressed securities (distressed companies face uncertain and troubled conditions and may be involved in reorganizations, restructurings and bankruptcy proceedings) and common stocks though there is a 15 percent cap (upper limit) on investment in distressed securities.

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