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.

Last Week In Review: ETF News And Blog Posts To 1/27/2013

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 1/27/2013.

The relentless march of the major market indexes into the nosebleed section continued, as the S&P 500 took out its milestone 1,500 level on the second try by closing the week at 1,503.

It’s simply amazing what the Fed’s monthly monetary pump fest of $85 billion can do as there seemingly is no end in sight as to how high we can go. Some analysts pegged the next level at the 1,560 area, which would represent a new high for this benchmark index. We may get there, but when this run ends, it will end badly in a hurry most likely caused by some black swan event.

Obviously, there is no rationale behind this move as the economy continues to chug along totally disconnected from current market levels. Nevertheless, the trend is towards higher prices until the music stops, at which point anything is possible. This is exactly the type of environment where you can get burned financially if you do not have your exit strategy in place.

Should the trend reverse, be sure to execute your sell stops. If you’re new to the sell stop idea, you can download my free e-Book on the topic here.

Over past week, we covered the following:

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One Man’s Opinion: Will US Equities Rise As The Budget Deficit Shrinks?

Ulli Market Commentary Contact

The Federal Reserve balance sheet has nearly tripled in size to $3 trillion over the last few years, which is a cause for concern, says David Kelly, chief market strategist at JP Morgan Funds.

The US Fed has loaded up their balance sheet with a pile of very bad assets, i.e. very low yielding bonds, and eventually they have to pay realistic rates on reserves. Few years from now, markets will wonder if the Federal Reserve can make any income at all and it might run this at a net loss, he noted. The Federal Reserve is not helping the economy a lot right now, but it is creating itself a problem for the future by building this balance sheet, David added.

Asked to explain how central banks like the US Fed manage to build balance sheets as large as $3 trillion, David said central banks are special banks since they can print money. All they need to do is print fresh notes and use them to buy sovereign bonds. The bonds are the assets (since they generate income) and the newly printed notes are part of liabilities.

The central banks can, in theory, build balance sheets of any size, he mentioned. But as Milton Friedman had noted that there are consequences to everything, there will be consequences for the Federal Reserve as well for this extraordinarily aggressive policy of building its balance sheet.

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