Fiscal Cliff Jawboning Reverses Triple Digit Sell Off

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Market volatility took on a new meaning today as the Dow rose 107 points after having slid way south to a loss of 112 points early on with all major indexes following suit in similar fashion.

To be clear, nothing was resolved in regards to the fiscal cliff issue, but much jawboning by Speaker John Boehner and President Obama threw an assist to the faltering markets and up we went for most of the day. And that’s how it will be for the next few weeks in that nothing matters but the comment of the hour by anyone who can get TV time.

“Remaing hopeful” or “being optimistic that we can continue to work together” is nothing but the same old rhetoric that makes for a nice photo op but has no content value other than that the markets feed on any hopeful comment with traders gaining optimism and moving into ‘risk on’ mode.

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7 ETF Model Portfolios You Can Use – Updated through 11/27/2012

Ulli Model ETF Portfolios Contact

More upside momentum pushed the S&P 500 up by some 0.7% since last week’s ETF portfolio report, although weakness set in yesterday as worries about any progress regarding fiscal cliff, or lack thereof, kept a lid on market advances.

I don’t believe that tangible results, no matter how inconsequential, will surface until the last possible moment or until the markets force the hand of the parties involved by staging a major sell off. It’s uncertainty at its finest, and it pays to play the next 5 weeks conservatively as anything is possible.

In the meantime, here’s the latest update to our ETF Model Portfolios:

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Equities Slip As Budget Worries Overshadow Alleged Greece Deal; Europe Rises

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[Chart courtesy of MarketWatch.com]

Equity ETFs edged lower as rhetoric over progress on budget negotiations by Senate Majority Leader Harry Reid triggered a late sell off that eclipsed better than expected Economic data and an alleged European deal on Greece aid.

Investors mostly shrugged off strong reports on the US economy and positive developments in Europe. The S&P/Case-Shiller 20 city index gained for the sixth straight month in September, signaling the US housing market is in the midst of recovery.

Demand for durable goods remained flat in October, a Commerce Department report showed, defying expectations for a 0.7 percent decline. New orders for US non-defense capital goods excluding aircraft climbed 1.7 percent last month, the most in five months.

Separately, a Conference Board report revealed consumer confidence rose to the highest level in more than four years in November.

Equity indexes spent most of the day bouncing around the breakeven line after European finance ministers meeting in Brussels cut interest rates on Greece’s bailout loans, suspended interest payments for a decade, gave Athens more time to repay and agreed for the country to buy back its own bonds.

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Indexes Stall Ahead Of Budget Negotiations; Europe Slips On Greece Worries

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

The S&P 500 snapped a five-day winning streak in the first full trading session since Wednesday, with stocks finishing mostly lower Monday as investors grew wary ahead of budget negotiations in Washington and Europe struggled to reach a consensus over Greece that would release the next tranche of aid money.

After slipping 109 points in early trade following comments by minority leader in the Senate Mitch McConnell on the impending budget stalemate, the Dow Jones Industrial Average (DJIA) trimmed losses to finish 57 points lower after White House Press Secretary Jay Carney issued a statement stating a deal on the fiscal cliff could allegedly be reached soon.

The mood on Wall Street soured further after pro-independence parties won a majority in Spain’s Catalonia region, strengthening the chorus for referendum on secession next year.

Breadth within the equity benchmark turned negative as the blue-chip index came off its best weekly performance since June with 23 of the 30 components finishing in the red.

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ETFs/Mutual Funds On The Cutline – Updated Through 11/23/2012

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 308 (last week 118) 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. 72 ETFs (last week 32) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 701 (last week 217) above the line and 158 below it out of the 861 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 11/25/2012

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 11/25/2012.

The previous week’s market pain was followed by a rip-roaring low volume rally that pushed the S&P 500 back above its 1,400 level and the DJIA above its psychologically important 13,000 milestone.

The big and obvious question is as to whether this was just a dead cat bounce, after November’s selling spree, or the beginning of a possible year end rally.

If so, it is wide open what this rally might be based on. The same old issues, which took the market down, are still staring us in the face with no apparent or concrete resolution in sight wherever you look.

Whichever direction the market decides to go, I believe it will not be a smooth ride. We might see exuberant rallies followed by jaw dropping pullbacks, which means that guarding your assets should be priority number one as downside risk remains far greater than upside potential.

Over past week, we covered the following:

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