Equity ETFs Sink As Hope For Further Stimulus Fades; Europe Ends Lower Over Weak Data

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

US equity ETFs retreated Thursday as a string of positive economic data dimmed hopes of further monetary stimulus ahead of Friday’s speech by Chairman Ben Bernanke.

A Labor Department report showed number of Americans filing for first-time unemployment benefits for the week ending August 25 remained flat at 374,000, slightly higher than an estimated 370,000 by analysts polled by Briefing.com.

A separate Commerce Department report showed the core PCE inflation number, a gauge of prices linked to consumer spending, gained only 1.3 percent in the 12 months ended in July against the Fed’s target of two percent, the least since October 2009, indicating there’s room for further expansion.

The Dow Jones Industrial Average (DJIA) shed 107 points, with the breadth within the 30-stock blue-chip index turning overwhelmingly negative as decliners outran gainers 28-to-2.

The S&P 500 Index (SPX) fell 11 points to close below the 1400 mark for the first time in four weeks.

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Treasuries Snap Three-Day Gains As Fed Sees Gradual Expansion; Indexes Limp Higher

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

The major indexes finished Wednesday with slim gains after the Federal Reserve’s Beige Book showed the US economy grew gradually across 12 districts with improving service-sector and retail activity offset by weak manufacturing.

On another dull August trading day, stocks remained largely range-bound after the release of mixed economic reports on the day. A Commerce Department report showed the US economy expanded at 1.7 percent in the second quarter, more than the previous estimate of 1.5 percent, while a separate report from the National Association of Realtors showed pending home sales jumped 2.4 percent in July, their highest level in two years, when a home-buyer tax-credit was set to expire.

While not overwhelming, economic data paint a picture of some improvement, which may be disappointing to those looking for an all-out QE 3 commitment by the the Fed’s
Bernanke during his upcoming speech on Friday. Personally, I think that he will disappoint the QE addicts, since I simply can’t see a major announcement with the economy chugging along while the market indexes are hovering multi-year highs.

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7 ETF Model Portfolios You Can Use – Updated through 8/28/2012

Ulli Model ETF Portfolios Contact

More indecisiveness prevailed last week as the S&P 500 moved in a range of barely 5 points and closing slightly lower since last week’s ETF model portfolio report.

With the summer nearing its end, Wall Street’s big guns will return next week and trading volume is sure to pick up; the unknown is in what direction? Some clue is likely to come out of Ben Bernanke’s speech from Jackson Hole, Wyoming, this Friday, an event that has the QE addicted crowd on edge.

Personally, I think the speech will be a non-event as, given the current state of the economy along with the elevated and unreal level of the major indexes, will not be enough of an impetus to pull out whatever ammunition is left in the Fed’s arsenal. Additionally, any premature accommodative easing will not pressure politicians on both sides of the isle to get serious about spending and debt issues; only a serious market pullback will.

In the meantime, here’s the latest ETF model portfolio update:

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Going Nowhere In A Hurry Ahead Of Bernanke Speech; Draghi Skips Jackson Hole Citing Work

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

US blue-chip stocks closed lower Tuesday while the NASDAQ composite finished in the green to extend gains for the second straight session as investors cheered better-than-expected housing data even as consumer confidence plummeted ahead of a potentially market-moving speech by the US Fed chairman later this week.

The S&P/Case-Shiller index that surveys home price across 20 cities and covers about 80 percent of the US housing market showed a 6.9 percent gain in the second quarter, beating analysts’ estimate of a 0.3 percent decline.

The US dollar declined Tuesday as hopes of more quantitative easing faded after European Central Bank President Mario Draghi cancelled his scheduled speech Saturday at the global central banker’s economic symposium in Jackson Hole. The dollar index, a barometer of the greenback’s strength against a basket of six global currencies, fell to 81.334 from Monday’s reading of 81.696.

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Markets Drift Lower On Indecision; Europe Rises On Tech And Banks

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

US blue-chip indexes closed lower while tech-stocks jumped as investors remained undecided ahead of Federal Reserve chairman Ben Bernanke’s speech in a global banking symposium later this week.

The Dow Jones Industrial Average (DJIA) lost 0.3 percent after the blue-chip index’s breadth turned negative with 20 of the 30 stocks closing lower. The S&P 500 Index (SPX) closed fractionally lower while the tech-laden NASDAQ Composite (COMP) bucked the trend to close 0.1 percent higher after its biggest component Apple Inc (AAPL) added nearly 2 percent to hit a fresh all-time high after the smartphone maker aced rival Samsung in a patent lawsuit.

That was the excitement on the equity front as demand for safe-havens drove yields on 10-year Treasuries to near two-week lows on speculation US Fed chairman Bernanke will make a case for further asset purchases in his August 31 speech in Jackson Hole, Wyoming.

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ETFs/Mutual Funds On The Cutline – Updated Through 8/24/2012

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 330 (last week 334) 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. 67 ETFs (last week 68) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 788 (last week 803) above the line and 73 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.