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 317 (last week 330) 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. 64 ETFs (last week 67) 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 788) above the line and 80 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 9/2/2012.
The big speech from Bernanke at J-Hole came and went and, as I suspected, no earth shattering announcement was made other than the usual jawboning that “we stand ready to act…, etc.”
Amazingly enough, the markets have become so totally dependent on what the Fed might or might not do that the mere uttering of potential QE still being a possibility is apparently enough to put a floor under any dramatic 0.5% pullback of the major indexes.
How great is that?
The Fed no longer needs to actually act but only offer the possibility that they might, and the QE addicted crowd happily pushes the major indexes higher? As if there were no longer fundamentals to consider or negative news events to be acted upon; nothing seems to matter; only Bernanke’s word is the gospel which determines market direction.
A pretty sad state of affairs, which will work until the day it doesn’t when unintended consequences make an appearance all of a sudden and rock the boat in a big way.
The sluggishness in the jobs market is neither a fiscal responsibility nor a monetary responsibility of the Federal Reserve, rather it’s about responsibility in the short run versus responsibility in the long run, says Edward Lazear, former economic adviser to President George W. Bush and a professor at the Stanford University.
The best policies to grow jobs are not the ones that are going to work in the next month or two, he noted, adding earlier measures (like quantitative easing) to grow jobs have not been particularly effective. In order to grow job, the economy needs to get back on the growth path as there’s nothing special about the job market right now.
The problem is that the recovery has not been strong enough and if we look at past data, growth has been about 2.2 percent annually since the economy came out of recession in the spring of 2009, he said. Looking at the number of jobs created since then, it becomes clear that the job market has done reasonably well, and we are close to historical averages. It’s not that jobs are not growing or the labor market is stuck, but the real problem is that the economy is stuck.
Emerging Global, the emerging markets focused ETF, has announced the launch of EGShares Beyond BRICs ETF (BBRC), a fund that seeks exposure to an often overlooked emerging market segment, giving investors an opportunity to diversify their portfolio.
EGshares is one of the first companies to move away from the MSCI Emerging markets Index to other more diversified and balanced benchmarks since the MSCI Index focuses heavily on quasi developed nations like Taiwan and South Korea.
Funds tracking the MSCI benchmark generally have extremely heavy exposure in the BRIC nations; stocks from Brazil, Russia, India and China make up for about 40 percent of the MSCI Emerging Markets Index, implying significant concentration risk in a handful sectors and nations.
The EGShares Beyond BRICs ETF gives investors an opportunity to get away from the BRIC nations to a host of new emerging markets. BBRC focuses on 15 other less developed emerging markets in four continents that include Chile, Colombia, Czech Republic, Egypt, Hungary, Indonesia, Malaysia, Morocco, Mexico, Peru, Philippines, Poland, South Africa, Thailand and Turkey. The fund replicates the Indxx Beyond BRICs Index which uses a free-float market-cap weighted methodology and holds 50 stocks.
US, EUROPE STOCKS RALLY AFTER BERNANKE HINTS AT QE 3 IN JACKSON HOLE SPEECH
US stocks rallied Friday to cap a disappointingly low volume August with more gains following the US Fed Chairman Ben Bernanke’s speech at Jackson Hole where the US central bankers hinted at more accommodative measures if elevated unemployment levels didn’t come down.
The Dow Jones Industrial Average (DJIA) added 0.7 percent on the day while the S&P 500 Index (SPX) rose 7 points, adding two percent for the month and capping its third straight monthly gain.
Treasuries advanced, pushing 10-year yields to the lowest level in almost four-weeks while 30-year Treasury yields fell to its lowest level since August 7 after Bernanke said US labor market stagnation was a “grave concern” and further bonds purchases by the Federal Reserve remained an option.
While the Fed did not make any definite promises, ex-Fed governor Robert Heller provided a translated version in this video (hat tip to ZeroHedge for this link):
The US dollar sank to its lowest level in more than three months on the last trading day of August after the Fed Chairman said “nontraditional policies” can’t be ruled out if the situation warrants, while addressing economists and central bankers at the Kansas City Fed’s annual symposium at Jackson Hole.
The dollar index, a gauge of the greenback’s strength against six of its global rivals, fell to 81.242, the least since May 21. Down 0.5 percent for the week, the index shaved 1.7 percent on the month.
Meanwhile, European stocks rallied after surging banking stocks pushed indexes into the green territory after US Fed dropped broad hints of another round of asset purchases to boost growth, without giving any time frame.
European economic data calendar was relatively light Friday. The annual consumer price index, a barometer of inflation, accelerated to 2.6 percent in August from 2.4 percent in July while unemployment rate hit an all-time high of 11.3 percent in July.
Spanish stocks emerged as the biggest percentage gainers after media reports suggested ECB board member Benoit Coeure has confirmed that the central bank is working on a way to intervene in the bond markets, particularly in the short maturity segment. The IBEX 35 index jumped 3.1 percent, capping a 10 percent gain for August. Lets’ wait and see if these ideas can be successfully run by the paymaster in charge, namely Germany.
Buoyed by banks, the German DAX 30 index rose 1.1 percent, up 2.9 percent for the month. The French CAC 40 index added 1 percent Friday, marking a 3.7 percent gain for the month. The British FTSE 100 index however bucked the day’s trend as oil firms declined, losing 0.1 percent on the day. On the month, the index added 1.4 percent.
In the ETF space, gold and silver linked funds exploded after Bernanke’s speech. Mining funds outperformed the broad market with the Van Eck Market Vectors Junior Gold Miners ETF (GDXJ) vaulting an incredible 5.45 percent while the Van Eck Market Vectors TR Gold Miners ETF (GDX) surged 4.17 percent. Other precious metal funds like the iShares Silver Trust (SLV) and the Global X Silver Miners ETF (SIL) also made impressive gains, adding 4.59 percent and 5.30 percent, respectively on the day.
Our Domestic Trend Tracking Index (TTI) improved while the international one slipped but remained on the bullish side of the trend line.
Here’s how we ended the month:
Domestic TTI: +3.06% (last week +2.95%)
International TTI: +0.99% (last week +1.69%)
Have a great week.
Ulli…
Disclosure: No holdings
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READER Q & A FOR THE WEEK
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Q: Ulli: Just a question. What is your impression of the Low Volatility ETF’s introduced last year? They are having a marvelous run-up as I can see. SPLV & EEMV have made large jumps this yr alone. I looked and did not find the 6 new funds in your tables but that is possibly my fault for looking too fast.
A: Frank: Yes, the use of low volatility ETFs can be extremely valuable in that you can avoid the sell stop triggers occasionally. I especially like SPLV, which has done better than its index, and I will add it to the data base, since it now features sufficient volume.
Personally, in my advisor practice, I have preferred lower volatility products this year. For example, while my preference has been model portfolio #2, I had substituted DVY for VTI for many clients with the result that we never got stopped out and therefore have handled the usual market fluctuations much better.
Actually, when you chart the S&P, DVY and SPLV, you will see that the less volatile of the 3 have outperformed the index. While I don’t own SPLV at this time, I may very well make it a part of some of the model portfolios in the future.
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US, EUROPE STOCKS RALLY AFTER BERNANKE HINTS AT QE 3 IN JACKSON HOLE SPEECH
US stocks rallied Friday to cap a disappointingly low volume August with more gains following the US Fed Chairman Ben Bernanke’s speech at Jackson Hole where the US central bankers hinted at more accommodative measures if elevated unemployment levels didn’t come down.
The Dow Jones Industrial Average (DJIA) added 0.7 percent on the day while the S&P 500 Index (SPX) rose 7 points, adding two percent for the month and capping its third straight monthly gain.
Treasuries advanced, pushing 10-year yields to the lowest level in almost four-weeks while 30-year Treasury yields fell to its lowest level since August 7 after Bernanke said US labor market stagnation was a “grave concern” and further bonds purchases by the Federal Reserve remained an option.
While the Fed did not make any definite promises, ex-Fed governor Robert Heller provided a translated version in this video (hat tip to ZeroHedge for this link):
