7 ETF Model Portfolios You Can Use – Updated through 12/18/2012

Ulli Model ETF Portfolios Contact

Hope, that a compromise to the fiscal cliff issue will be soon forthcoming, proved to be a powerful driver, which propelled the major market indexes to another 1.3% gain (S&P 500) since last week’s ETF model portfolio report.

Especially the past two trading days have seen the averages go vertical, which makes me wonder if this will a confirmation of the old adage “buy the rumor, sell the fact.” It remains to be seen if these out-of-economic-reality market levels can be sustained should the fiscal cliff be avoided.

Needless to say that in this environment balanced portfolios are lagging, with #5 leading the pack to the upside due to its 100% equity exposure. Again, you can’t measure portfolio performance just during a brief up period, but you need to combine a bullish and a bearish cycle in order to make your evaluation.

Here’s the latest update of our ETF Model Portfolios:

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Equity Indexes Go Vertical On Fiscal Cliff Hope; Eerie Chart Of The Day; Europe Tracks Higher

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

US equity indexes extended gains into a second session with the S&P 500 index hitting its highest level in two months amid signs of progress in Washington in reaching a deal to avert a hike in taxes and steep spending cuts next year.

Stocks surged higher after House Republicans held a news conference to say they would continue to engage the president while working on an alternative plan that would include tax hikes for Americans making more $1 million annually. Democrats however immediately rejected the proposal as inadequate.

The White House softened its stand on late Monday when President Obama offered to start tax rate increases at $400,000 in earnings instead of $250,000, lowering his tax revenue demand by $200 billion. The revised plan would cut $1.22 trillion in spending while raising $1.2 trillion in taxes in the next decade.

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Hopium Lifts Equities As Budget Talks Are Still Alive; Europe Turns Lower On Cliff Worries

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

Led by gains in financial stocks, US equity indexes pushed higher with the S&P 500 logging its biggest gain in about a month, as markets weighed news of progress on budget negotiations in Washington to avoid tax hikes and spending cuts that may tip the economy back in recession.

With about two week weeks remaining to avert going over the fiscal cliff, House Speaker John Boehner met President Obama for about 45 minutes at the White House. Boehner has suggested over the weekend, he was open to higher tax rates for wealthiest Americans while, according to Bloomberg, Obama is considering concessions on Social Security benefit increases in return. Boehner has also offered to extend the debt ceiling for a year in order to help reduce the budget deficit, reported CNN.

Separately, manufacturing in the New York region shrank more than forecast in December with the Empire State manufacturing index falling to minus 8.1 from minus 5.2 in November. The New York Fed’s benchmark is in the negative territory for the fifth straight month now, but at this point the markets chose to ignore bad fundamental news.

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ETFs/Mutual Funds On The Cutline – Updated Through 12/14/2012

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 341 (last week 342) 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. 79 ETFs (last week 78) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 673 (last week 723) above the line and 186 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 12/16/2012

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 12/16/2012.

A minor upside breakout was quickly rebuffed as worry and lack of progress about the impending Fiscal Cliff kept the markets in a tight range with the S&P 500 giving back 4 points for the week.

Nothing was resolved that could put some smiles on the bullish crowd and, with recess looming next Tuesday, if this weekend does not bring the parties’ estranged views closer together, we will be sliding off the cliff come January.

However, if a sharp market pullback packs enough punch, it might just be enough to get the warring factions back to the negotiating table and create a retroactive solution. I am not sure whether that will happen, but the possibility exists. In the meantime, all bets are off as it is totally unknown, although widely opined, as to what market reaction might be.

A cautious investment stance is your best course of action.

Over past week, we covered the following:

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One Man’s Opinion: Is The European Recession Continuing?

Ulli Market Commentary Contact

The recession in the peripheral countries of Europe are continuing and have affected the core, says Nouriel Roubini, Nobel Laureate economist and chairman of Roubini Global Economics.

France and Germany have slowed down since their major markets, the peripheral Europe and Asia, including China, have witnessed slowdowns. The eurozone recession – fed by fiscal austerity, a strong euro, a bank credit crunch in the periphery, and lack of business and consumer confidence, will continue in 2013, he noted.

Asked if he agrees with The Financial Times’ choice of Mario Draghi as the person of the year, Roubini answered in the affirmative. By last summer, the eurozone faced the prospect of complete disintegration and Draghi, through his OMT announcements, reduced those tail risks.

Today, the risk of Italy and Spain losing debt market access is lower. The probability of Greece leaving the currency bloc has also come down temporarily. That being said, the fundamental problems in the eurozone, which includes lack of growth, recession, high private and public debt, lack of competitiveness, lack of structural reforms and issues of debt sustainability, still remain unresolved, he noted.

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