7 ETF Model Portfolios You Can Use – Updated through 10/2/2012

Ulli Model ETF Portfolios Contact

Despite one sharp down day last week, the S&P 500 continued to ride the trading range and added some 4 points since my last ETF Model Portfolio report.

Upward momentum in the indexes has definitely slowed down as the Fed’s ongoing and open ended QE program no longer provides the market with what it’s been living on for the past few years, and that was “anticipation” of more QE and not its actual implementation.

We are now facing the month of October with all of its historical uncertainties, so I feel the need to sing the same song again and that is to remind you to be aware of your sell stops and execute them should the need arise.

While it may never come to that point, this is not the moment in time to take any chances as negative data points can surface suddenly and unexpectedly and pull the markets back to a level that is more aligned with underlying fundamentals.

In the meantime, take a look at the latest ETF model update:

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Dow Industrials Closes Lower On Spain Worries; Banks Slip In Europe

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

The major indexes finished mixed today with the Dow Jones Industrial Average sinking for the first time in three days after Spanish Prime Minister Mariano Rajoy contradicted a previous Reuters report that said the country could seek help from the European Union as early as this weekend.

The Dow Jones Industrial Average (DJIA) closed 33 points lower, recovering from a steeper 90-point drop. 19 of the 30-component blue-chip index ended lower as breadth turned negative on a choppy trading day.

The S&P 500 Index (SPX) managed a modest 2 point gain on a last hour rebound to finish on the plus side with utilities and healthcare outperforming and materials faring the worst among its 10 business groups.

Treasuries hit a near one-month high as investors sought refuge in safe haven after Spanish Prime Minister Mariano Rajoy dismissed media reports the country may seek a full-fledged bailout shortly.

Reuters had previously reported quoting unnamed European officials that the Iberian nation is close to formally seek help though Berlin has signaled to Madrid to hold off as it believed the country was on course to repair the shortcomings and may not need a bailout. That would have to go down as the joke of the day.

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Equities Fizzle After Bernanke Speech Disappoints; Europe Ends Higher On ISM Data

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

US equity ETFs ended the first day of the quarter mostly higher after data released by the Institute for Supply Management showed US manufacturing activity rose to 51.5 in September, marking its first expansion in four months.

However, risk appetite diminished after Fed Chairman Ben Bernanke said headwinds to the economy due problems in Europe and ECB actions will not solve current problems, but will only provide time, deflating investor enthusiasm.

After vaulting as much as 161 points following the September ISM reading, the Dow Jones Industrial Average (DJIA) settled a more modest 78 points higher while the S&P 500 Index (SPX) added 3 points with healthcare and consumer staples outperforming and technology and utilities sinking the most among its 10 business groups.

The allure for safe havens spiked, pushing Treasury securities to near three-week highs after a September government survey showed manufacturing contracted for the second month in China. Risk aversion soured further after a Bank of Japan survey showed business sentiment has eased in the third quarter.

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ETFs/Mutual Funds On The Cutline – Updated Through 9/28/2012

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 348 (last week 163) 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. 76 ETFs (last week 79) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 816 (last week 830) above the line and 46 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 9/30/2012

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 9/30/2012.

With the anticipation of what the Fed might do next being gone, the markets returned to a more normal state and reacted to good and bad news as you might expect them to do. With QEternal now a given fact, the major indexes went through a mild correction with the S&P 500 giving back some 1.3% last week.

Nevertheless, we are still in a total disconnect from the fundamentals when looking at the elevated level of equities. Global economic data points are still confirming that a slowdown is underway, not just in the US but anywhere you look.

Still, the bulls remain in control so far, but weakness in equities has definitely spread since the Fed’s QE announcement. Whether that is just a short-term retrenchment is too early to tell but it behooves you to be aware of where your sell stops are in case downside momentum picks up speed. Should things get ugly, large crowds will attempt to squeeze through small exit doors, so you want to be ahead of the masses.

Over past week, we covered the following:

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One Man’s Opinion: The US Is Doing Pretty Well Compared To Europe

Ulli Europe Contact

The US economy is doing pretty well compared to the European ones, says David Blanchflower, a professor of Economics at the Dartmouth College and a Bloomberg Television contributing Editor.

Back from his trip to Europe, David says there is fear everywhere. In France, people are talking about Hollande’s dipping popularity while in Germany people are worried about unemployment rising. The GDP has contracted for the last three quarters in the UK. In comparison, the US is doing pretty well.

In Europe, the Spanish employment rate has been falling steadily since 2008. Barring last week’s sudden dip in unemployment numbers, the US job market has been fairly flat.

Quantitative easing is essentially about creating jobs and David disagrees with Phil Fed President Charles Plosser that quantitative easing will create inflation down the road. Plosser is worried about wage inflation and wage pressure, but there is no evidence that wage inflation has taken place.

In fact, the opposite is true; globalization has diminished workers’ bargaining power. The fear is that companies are not doing so well due to global slowdown, which according to David is misplaced because if they were not, they would have moved somewhere else, he noted.

Austerity is killing growth in Europe. Spending cuts in Europe have resulted in violent street protests across the debt stricken countries, which is a nightmare scenario that everybody was worried about.

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