Equities Eke Out Gain As Housing Offsets Earnings Lag; Europe Up As Spain Retains Rating

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

US equities managed modest gains Wednesday after a four-year high new-home construction data offset disappointing earnings results from technology bellwethers like IBM and Intel. It’s simply amazing to me that good data points (housing starts being one of them), way out of the range of normal, have appeared recently, very conveniently just prior to the elections.

It makes me wonder if there will be a market hangover once the election ordeal has finally passed and some reality as to the status of the real economy starts to sink in. Be that as it may, extending gains into the fourth session, the Dow Jones Industrial Average (DJIA) added 5 points. International Business Machines (IBM) witnessed the steepest fall, losing 4.9 percent, after Q3 revenues fell short of expectations. Breadth within the 30-component index traded positive with 23 stocks turning higher.

Shares of homebuilders surged after a Commerce Department report showed housing starts jumped 15 percent to an 872,000 annual rate last month, the most since July 2008 and better than what economists had predicted.

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7 ETF Model Portfolios You Can Use – Updated through 10/16/2012

Ulli Model ETF Portfolios Contact

The continued sell off after last week’s model portfolio report was finally offset by a strong 2-day rebound, as the S&P 500 shifted back into rally mode gaining roughly 1% over the past 5 trading days.

Contributing to yesterday’s move higher were better than expected earnings from several bellwether companies. Nevertheless, worries remain that slower growth in Europe and Asia may be affecting US companies more than anticipated, while the rise in the US consumer index by 0.6% in September will not help consumers to go on a reckless spending spree, which is a prerequisite of pulling the economy out of the doldrums.

As mentioned last week, I updated all dividends and distributions in our model ETF portfolios, and you can review the latest update below:

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US Stocks Rally On Economy, Earnings; Spain Lifts Europe

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

US stocks surged Wednesday with the Dow Industrials posting its biggest daily gain in more than a month following data showing a bunch of strong quarterly earnings report and a solid recovery in industrial activity in September.

Risk appetite got a boost after a Federal Reserve report showed industrial output climbed 0.4 percent in September, beating a 0.2 percent gain projected by economists. Manufacturing, which comprises 75 percent of the total, rose 0.2 percent during the period. Output at factories, mines and utilities had slumped 1.2 percent in August. A separate report, however, showed cost of living went up 0.6 percent in September, rising for the second successive month. Economists had projected a CPI gain of 0.5 percent for the month.

More good news followed from Europe after media reports suggested Germany may roll back its resistance to a full-blown Spanish bailout request. Finance Minister Wolfgang Schaeuble had cautioned Madrid against seeking a sovereign bailout in addition to its bank-bailout in September. According to reports, two lawmakers from the ruling Christian Democratic Party-led coalition indicated Germany is open to Spain requesting a precautionary credit line from the region’s permanent emergency fund, the European Stability Mechanism.

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US Equities Turn Higher As Retail Sales Lifts Sentiment; China, US Assist Europe

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

US equities moved higher Monday after retail sales data for September came in better than expected and Citigroup delivered above consensus quarterly earnings results.

Sentiment was buoyed after a Commerce Department report revealed retail sales rose by a seasonally-adjusted 1.1 percent, beating forecasts of a 0.8 percent rise marginally.

A separate report showed the Federal Reserve Bank of New York’s Empire State Manufacturing Index, though showing a contraction, improved to minus 6.2 in October from minus 10.4 in September, indicating slight improvement in manufacturing activity in the New York region.

The Dow Jones Industrial Average (DJIA) jumped 95 points posting its second straight daily gain. Breadth within the 30-stock blue-chip index turned positive with winners outpacing laggards 25 to 5. Banking and healthcare stocks topped the day’s gainer’s list.

The S&P 500 Index (SPX) added 11 points with healthcare gaining the most and telecommunications lagging among the 10 business groups.

Treasury yields moved up, pushing prices down as positive US retail sales number boosted risk appetite, diminishing the allure of safe havens.

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ETFs/Mutual Funds On The Cutline – Updated Through 10/12/2012

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 335 (last week 350) 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. 75 ETFs (last week 75) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 766 (last week 822) above the line and 96 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 10/14/2012

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 10/14/2012.

The markets did an about face as weakness set in across the board with the S&P 500 giving back some 2.2% over the past week.

It was about time, as index levels had gotten ahead of themselves given underlying economic realities. It seems that even the latest stimulus attempt by the Fed has lost its luster as the S&P 500 has now retreated to pre-QE-3 levels. In other words, the QE market hysteria has come to an end, at least for the time being.

We are now sitting on top of ECB’s Mario Draghi’s OMT stimulus rally from last month, and there is a good chance that this hyped market advance may be taken out as well.

Over past week, we covered the following:

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