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 375 (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. 86 ETFs (last week 74) have managed to remain in bullish territory after the recent market volatility.
The third report covers Mutual Funds on the Cutline. There are currently 838 (last week 825) above the line and 24 below it out of the 861 that I follow.
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 9/16/2012.
Not to be upstaged by Mario Draghi’s announcement that he will do “whatever it takes” to save the Euro during his prior week’s announcement, it was now Ben Bernanke’s turn to deliver the goods for the U.S.
His new QE-3 program is open-ended, which means it can run for as long as the Fed sees fit until the goal of lower unemployment has been achieved. Since none of the previous QE’s have helped in that respect, the Fed feels obliged to do more of the same.
Adding liquidity to the system is one thing, if that’s what the issue is. However, I still believe that the overriding concern continues to be too much debt (left over from the 2008 crisis) and more debt will not resolve this problem.
In the process of continuing to hit the Control+P button, the dollar will suffer as the instant gold rally has indicated. Yes, added liquidity may find its way into driving equities somewhat higher, but I have wonder for how long. We have now moved into unchartered territory, and there are bound to be unintended consequences lurking on the horizon.
The European finance ministers met in Cyprus on Friday to discuss financial issues in the EU. One of the sticking points has been whether Spanish Prime Minister should seek ECB help by agreeing to adhere to the strict budgetary and fiscal conditions that are a prerequisite for such intervention.
If Spain refuses to seek help formally, will the rally in Spanish and Italian bonds continue? That’s a distinct possibility since it depends on the market’s perception on why Madrid may delay seeking ECB intervention, says Luca Jellineck, head of European interest-rate strategy at Credit Agricole Corporate and Investment Bank.
Spain and Italy can borrow from the primary markets at a more affordable rate now after Draghi’s unlimited bond purchase announcement. If the issue is how far they can stretch it without asking for liquidity help from the ECB or EU partners, then the current trend is likely to continue since trends are by definition self-reinforcing and involves herd behavior in the market.
However, an open and acrimonious discussion over conditionalities may reverse the trend and widen spreads, with the ECB asking for more and Madrid refusing to toe the line, he noted.
Global X, the New York-based provider of exchange traded funds best known for its emerging market funds, has rebranded its Global X S&P/TSX Venture 30 Canada ETF to play the global small-cap miners niche.
The Global X Junior Miners ETF (JUNR) tracks the Solactive Junior Miners Index and is the first ETF to provide access to small cap mining companies globally. The benchmark is comprised of 96 companies that are involved in the mining of both precious and base metals like gold, silver, copper, nickel, iron, titanium and other base metals/materials.
The index is well diversified with the top holding accounting for only 2.6 percent of total assets. Companies from more than 10 countries contribute to the benchmark including Canada (34 percent), Australia (26 percent), US (18 percent), UK (7 percent) and China (4 percent).
Although commodity prices have been under pressure for much of 2012 due to a sluggish global economy, many have witnessed a change in fortune after central banks around the world initiated accommodative policies, and the trend is expected to continue in the short-term.
MAJOR INDEXES FINISH WEEK HIGHER ON FED STIMULUS; EUROPE RALLIES TO 15-MONTH HIGH
US equities capped gains Friday to extend its winning ways for the second week in a row that pushed the three indexes to multi-year highs as investors sought refuge in riskier but higher yield assets over worries the latest stimulus from the Federal Reserve will spur inflation.
After rising as much as 113 points, the Dow Jones Industrial Average (DJIA) settled 54 points higher at 13,593, up 2.15 percent on the week while the S&P 500 Index (SPX) added 6 points to settle at 1466 with energy outperforming among its 10 business groups.
Treasury prices tumbled Friday, pushing yields on 10-year securities the highest in six months while the yield on 30-year Treasury bond surged the most in a week in three years as the as investors dumped safe havens over concerns the Fed’s latest move will accelerate inflation.
The USD lost further ground Friday, erasing its gains for 2012 as the Federal Reserve’s stimulus plan was seen as dollar-negative in the short-run. The dollar index, a gauge that measures the greenback against a basket of six global currencies, dropped to 78.864 from 79.254 on Thursday, the least since May. The index has shed 1.7 percent for the week while the euro gained 2.4 percent over the same period.
The big question in your mind is probably what the implications of an open-ended QE program by the Fed are. For an interesting and candid interview, here is Ex-Fed governor Kevin Warsh on the Fed’s “all-in” move:
Meanwhile, stocks in Europe rallied Friday following the FOMC announcement on Thursday, settling at a 15-month high. The pan-European Stoxx Europe 600 index leapt 1.3 percent on the day with risk-sensitive sectors like banks and miners pacing the gainers.
In Germany, the DAX 30 index rose 1.3 percent Friday, up 2.7 percent for the week. The FTSE 100 rose 1.6 percent for the day, propelled by gains in the banking and energy sector. The London index added 2.1 percent on the week.
In the ETF space, basic and precious metals-linked funds surged as investors rushed to buy the yellow metal to hedge against inflation. The Market Vectors Gold Miners ETF (GDX) and the Market Vectors Junior Gold Miners ETF (GDXJ) were among the biggest percentage gainers, adding 2.55 percent and 2.62 percent, respectively.
The SPDR S&P Homebuilders ETF (XHB) jumped 2.25 percent while the iShares Dow Jones US Home Construction Index Fund (ITB) rose 2.54 percent after shares of homebuilders, including PulteGroup, Hovnanian Enterprises and Toll Brothers continued to rise following the Fed’s mortgage buying news yesterday.
In a surprise move, the so-called fear-tracking CBOE volatility index (VIX) jumped 3.27 percent. VIX typically moves in opposite direction to the market, which could very well indicate a temporary upcoming trend reversal.
Our Trend Tracking Indexes (TTIs) rallied higher with the indexes, but the international TTI, which is far more volatile, really took off as the closing numbers indicate.
Here’s how we ended this week:
Domestic TTI: +3.80% (last week +3.75%)
International TTI: +6.24% (last week +3.67%)
Have a great week.
Ulli…
Disclosure: No holdings
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READER Q & A FOR THE WEEK
All Reader Q & A’s are listed at our web site!
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Q: Ulli: Recent news from Porter Stansburry, Addison Wiggins, and others suggest the USA’s Dollar is about to see rapid degradation in value, and it going to lose its place as the worlds reserve currency? If this posture is valid, what moves need be made to preserve or grow wealth?
A: Joe: While that maybe a possibility in the future, I don’t see this as an issue right now. The dollar, as represented by UUP, is in bullish territory as the flight to safety out of Europe continues.
We need to wait until that trend reverses to make an informed decision as to what other asset classes maybe heading north at that time. Trying to predetermine any potential outcomes right now is simply a gamble since there are way too many variables that could influence market direction.
Wait for the trend to give you a better picture.
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MAJOR INDEXES FINISH WEEK HIGHER ON FED STIMULUS; EUROPE RALLIES TO 15-MONTH HIGH
US equities capped gains Friday to extend its winning ways for the second week in a row that pushed the three indexes to multi-year highs as investors sought refuge in riskier but higher yield assets over worries the latest stimulus from the Federal Reserve will spur inflation.
After rising as much as 113 points, the Dow Jones Industrial Average (DJIA) settled 54 points higher at 13,593, up 2.15 percent on the week while the S&P 500 Index (SPX) added 6 points to settle at 1466 with energy outperforming among its 10 business groups.
Treasury prices tumbled Friday, pushing yields on 10-year securities the highest in six months while the yield on 30-year Treasury bond surged the most in a week in three years as the as investors dumped safe havens over concerns the Fed’s latest move will accelerate inflation.
The USD lost further ground Friday, erasing its gains for 2012 as the Federal Reserve’s stimulus plan was seen as dollar-negative in the short-run. The dollar index, a gauge that measures the greenback against a basket of six global currencies, dropped to 78.864 from 79.254 on Thursday, the least since May. The index has shed 1.7 percent for the week while the euro gained 2.4 percent over the same period.
The big question in your mind is probably what the implications of an open-ended QE program by the Fed are. For an interesting and candid interview, here is Ex-Fed governor Kevin Warsh on the Fed’s “all-in” move:
