Early Sell Off Followed By Higher Close On Mixed Economic Data; Europe Ends Unchanged

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[Chart courtesy of MarketWatch.com]

US stocks fought back, rebounding from earlier losses Tuesday as a rally in retail and transportation shares eclipsed concerns about discussions on raising the debt ceiling in Washington, while further weakness for Apple weighed on the technology sector.

On the economic news front, reports showed US retail sales rose 0.5 percent in December, led by an improvement in auto sales while producer prices fell 0.2 percent. Manufacturing, however, continued to be a weak spot with the Empire State Index, the gauge of manufacturing activity in the New York region, slipping for the sixth straight month in January as the industry faced the effects of lackluster demand overseas and fiscal uncertainty at home, according to the New York Federal Reserve Bank.

With as little as a month until the US runs out of money to honor its liabilities, Federal Reserve Chairman Ben Bernanke urged the Congress to raise the debt ceiling swiftly while President Obama warned Republicans not to leverage the need for a debt-limit increase to force through spending cuts.

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Dell Rally Is Offset By Apple Slide In The US; Europe Declines For A Third Day On Data

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[Chart courtesy of MarketWatch.com]

US equities closed mixed Monday, with two of the three benchmark indexes slipping into negative territory as Apple Inc’s near four percent drop amid concern about iPhone sales offset a rally in Dell Inc.

Apple, the most valuable company, sank 3.6 percent that wiped out $17 billion in investor wealth after the Wall Street Journal and Japan’s Nikkei reported the smartphone maker had cut iPhone production on weak demand.

Shares of Dell surged 13 percent, the most since October 2008, after Bloomberg news reported the Texas-based PC-maker is in buyout talks with private-equity firms while Hewlett-Packard jumped 4.9 percent after market researcher Gartner Inc said the company reclaimed the top PC-maker ranking from Lenovo Group Ltd. JP Morgan upgraded the stock to neutral from underweight.

President Barack Obama urged the Republican lawmakers not to use the debt ceiling as leverage in negotiations on spending-cuts while addressing a news conference in Washington. The opposition has already hinted at government default or shutdown as a means to force cuts in government spending.

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ETFs/Mutual Funds On The Cutline – Updated Through 1/11/2013

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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 363 (last week 362) 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 84) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 781 (last week 771) above the line and 78 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 1/13/2013

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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 1/13/2013.

The pace of last week’s pump fest slowed noticeably, but the S&P 500 managed to add some 6 points over the last five trading sessions.

As I have facetiously posted before, it appears to be downright illegal for an index to close in the red, as the automatic last hour afternoon lift-a-thon always throws an assist when market direction appears to look dicey. This is how things work now in a centrally planned market, which by now no longer resembles any similarity to the actual underlying economy.

If you have not noticed this phenomenon, you can review the intraday chart of the S&P 500 at day’s end; it’s posted daily with my market commentary.

Over past week, we covered the following:

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One Man’s Opinion: Do US Banks Still Pose A Systemic Risk To The Economy?

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Legendary investor Warren Buffet thinks US banks are out of the woods. In a recent interview with the Bloomberg, Buffet said he guarantees US banks will not get the country in trouble as capital ratios are huge and the excesses on the asset side has been largely cleared out.

Neil Barofsky, a former inspector for the Treasury’s Troubled Assets Relief Program and a Bloomberg Television contributing editor, begs to differ and believes large US banks still pose systemic risk to the economy.

There’s a difference between things being improved and sufficient, said Neil, adding the bank capitals today are much better than they were at the heart of the crisis, and the banks and the government gets some credit for pushing that. But that’s not to say it’s sufficient.

If you look at how much capital they actually have after considering the complex risk-weightings and the non-tangibles that count as capital, and then if you consider the more aggressive way that Europe counts as capital for its banks, you still are looking at leverage ratios of 33-to-1; Lehman-type territory. So it’s good that there are higher capital ratios, but to say they won’t cause trouble is a bridge too far, Neil observed.

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New ETFs On The Block: iPath S&P MLP ETN (IMLP)

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iPath, the exchange-traded note issuer arm of Barclays Bank PLC, has recently announced the launch of iPath S&P MLP ETN (IMLP), an exchange-traded note (ETN) that aims to provide investors exposure to the Standard & Poor MLP Index.

IMLP pays a variable coupon quarterly and is designed to provide access to the energy infrastructure-focused Master Limited Partnership (MLP) segment, a small but vibrant pocket populated by investors who wish to avoid the low yielding bond fund sector.

Energy infrastructure tracking MLPs are usually operators and owners of assets that are used for storage and supply of energy products such as oil and gas pipelines and storage facilities. The S&P MLP index, the fund’s underlying index, follows firms that trade publically as LLPs  with the legal structure and tax benefits similar to MLPs or as pure MLPs on major US exchanges such as the NYSE or the NASDAQ, and are listed either in the Gas Utilities Industry or the GICS Energy Sector.

MLPs display three distinct characteristics that make them attractive to certain investors:

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