Last Week In Review: ETF News And Blog Posts To 8/26/2012

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 8/26/2012.

The markets pulled back slightly this week as the tug-of-war between those that are counting on a new round of QE and those that question its validity favored the latter.

The long overdue but very minor market retraction is barely worth mentioning, as the QE hope addicted crowd plays right into the hand of the Fed. How? The mere mentioning of the fact that there is further QE ammunition available seems to be enough to get the markets moving upwards again.

Just putting the QE word in any headline with the MSM (Main Stream Media) seems to be sufficient enough to pull the indexes out of any afternoon sell-off mode, which we have seen throughout the month of August. As I posted, it was all on extremely low volume, which is about to change after the Labor Day weekend when important upcoming news events will shift into overdrive.

Over past week, we covered the following:

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Is Germany Prepared For A Greece Exit?

Ulli Europe Contact

As the world looks forward to the outcome of meetings between German Chancellor Angela Merkel and French President Francois Hollande later in the week, it’s likely that Athens will make an exit from the eurozone soon as Berlin is unlikely to commit further funds for Greece, says Artur Fischer, co-chief executive of Boerse Berlin AG.

Since Germany goes to elections next year, conservative parties would be very reluctant to give more money fearing electoral backlash. Since Greece’s problems are systemic and require wide ranging structural reforms, extending bailout-linked austerity deadlines are of little use because Athens will need more bailout money in future even if concessions are provided now, he said.

Greece faces a real credibility crisis and it needs to convince Europe that the reforms carried out by the country are real and effective. Germany is unlikely to commit any further funds for Greece and Athens may just manage to secure an extension of its deficit reduction targets if the Troika of EC, the IMF and the ECB are convinced about its progress.

Due to the protracted crisis in Europe, the German economy has taken a hit with all the leading economic indicators turning negative. The German economy will probably witness higher unemployment and further difficulty going forward and in an election year politicians can ill afford such developments.

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New ETFs On The Block: NASDAQ Technology Dividend Index Fund (TDIV)

Ulli Dividend ETFs Contact

First Trust, the Wheaton, Illinois-based issuer with more than 72 ETF products that is behind the popular AlphaDEX series of exchange traded funds, has become the first company to try tapping into two relatively new investment trends; dividends and technology stocks.

Since dividend paying tech stocks are a rarity, after all tech giants like Adobe, EMC and Google don’t have a history of paying dividends and Apple has just started to loosen its purse, TDIV tries to fill in the gap by providing a simplified way to gain targeted access  to dividend-paying technology companies.

TDIV tracks the technology companies that pay dividends by replicating the NASDAQ Technology Dividend Index, a benchmark that comprises of NASDAQ or the NYSE listed telecom and tech stocks that have paid regular dividends for the past twelve months with a minimum dividend yield of 0.5 percent and have not been issued by firms currently in bankruptcy proceedings.

Each security also must have a market capitalization of $500 million and have a minimum dollar trading volume of $1 million. Technology stocks make up for about 80 percent of the fund while telecom stocks make up for the remaining 20 percent. According to Moody’s, technology firms are expected to pay $26 billion in dividends in 2012 and TDIV intends to give investors access to the dividend pie of technology companies. Also research by First Trust shows dividend of technology companies have grown the most over the past seven years at an annualized rate of about 16.5 percent per year.

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08-24-2012

Ulli Newsletter Archives Contact

ETF/No Load Fund Tracker Newsletter For Friday, August 24, 2012

ETF/No Load Fund Tracker StatSheet

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THE LINK TO OUR CURRENT ETF/MUTUAL FUND STATSHEET IS:

https://theetfbully.com/2012/08/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-08232012/

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Market Commentary

Friday, August 24, 2012

A ROLLER COASTER: NOW FED STIMULUS HOPES ARE BACK ON; EUROPE ENDS WINNING STREAK

US equities fought back after a four-session slide ending the week on a high as hopes for monetary expansion received a boost after Fed chairman Bernanke said the central bank has more tools in its kitty to stimulate economic activity.

Remember, there was no promise of any QE but merely the mention that additional ammunition allegedly resides in the Fed’s toolkit. We’ve seen that all month as sentiment swung between “will” or “won’t” there be more stimulus, and markets simply reacted to those words when found in headline news. As a result, the Fed may never have to actually do anything but simply utter the word that Wall Street clamors.

The Dow Jones Industrial Average (DJIA) surged 0.8 percent, still off 0.7 percent for the week. Breadth within the blue-chip index turned positive after four down days with only four of its 30 components finishing lower. The S&P 500 Index (SPX) rose 0.7 percent, down 0.5 percent for the week while the NASDAQ Composite (COMP) added 0.5 percent, down 0.2 percent over last Friday.

Treasuries advanced after a four-week slide to finish the week higher despite prices falling on the day as worries over the European debt crisis weighed on investors.

The dollar index, a barometer of the greenback’s strength against a basket of six leading currencies, rose to 81.625 from 81.368 in late trading Thursday. The euro declined Friday after a report suggested the ECB won’t announce its much discussed bond buying program on September 6 as widely anticipated, but would rather wait for the German court ruling on leveraging the region’s bailout fund (ESM) later in September.

Meanwhile, German chancellor Angela Merkel proved Athens’ critics wrong after announcing Berlin will back Greece in its effort to overhaul the economy. Underlining that the conditions for Greece’s international bailout remain in place, Merkel, in an apparent rebuke to her own party-men and other critics who advocated Greece’s exit from the currency zone, said she remained committed to Greece’s continuation in the euro, adding the strict austerity measures are meant to help Athens reach ‘light at the end of the tunnel.’

Well, to my way of thinking, she will not be able to put further taxpayers’ money at risk without severe political backlash as this alleged light at the end of the tunnel may very well turn into an oncoming train.

European stocks closed higher for the day, driven by a late-session rally even though indexes were off last Friday’s high, snapping an 11-week winning streak. The Stoxx Europe 600 index climbed 0.1 percent after trading in the negative territory most of the day. The pan-European index finished 1.8 percent lower on the week.

However, Germany’s DAX 30 index rose 0.3 percent on the day while in Paris the CAC 40 index managed a slight gain. However, both the DAX 30 and the CAC 40 are down 1 percent and 1.6 percent on the week, respectively.

In the ETF space, the Van Eck Market Vectors Vietnam ETF (VNM) bounced back strongly after yesterday’s steep decline, adding 3.29 percent on the day. The Teucrium Natural Gas Fund (NAGS) slumped 2.75 percent after Thursday’s better-than-expected inventory report put downward pressure on natural gas.

Our Trend Tracking Indexes (TTIs) meandered with the major indexes and, as posted, the International TTI generated a new ‘Buy’ signal effective with the close of the market on 8/21/12.

Here’s how we ended the week:

Domestic TTI: +2.95% (last week +3.05%)

International TTI: +1.69% (last week +2.34%)

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!
Check it out at:

http://www.successful-investment.com/q&a.php

A note from reader Rett:

Q: Ulli: Have you ever regressed your historical TTI signals to the gain or loss of the S&P 500 over the following 6 months?

In other words, have you been able to say, for example, that “The S&P should gain 5% over the next 6 months, plus or minus 3%, based on the current position of the “TTI”?

A: Rett: No, I have never used the TTI as a forecasting tool. It’s simply designed to let us determine the major direction of the market, so that we don’t go “long” when this indicator slips into bear market territory.

In other words, in order to grow/preserve capital and to control downside risk, we need to be in sync with the major trend and neither against it nor make any wild guesses as to what “should” happen in the markets.

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WOULD YOU LIKE TO HAVE YOUR INVESTMENTS PROFESSIONALLY MANAGED?

Do you have the time to follow our investment plans yourself? If you are a busy professional who would like to have his portfolio managed using our methodology, please contact me directly or get more details at:

https://theetfbully.com/personal-investment-management/

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Back issues of the ETF/No Load Fund Tracker are available on the web at:

https://theetfbully.com/newsletter-archives/

ETF/No Load Fund Tracker Newsletter For Friday, August 24, 2012

Ulli Market Commentary Contact

ETF/No Load Fund Tracker StatSheet

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THE LINK TO OUR CURRENT ETF/MUTUAL FUND STATSHEET IS:

https://theetfbully.com/2012/08/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-08232012/

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Market Commentary

Friday, August 24, 2012

A ROLLER COASTER: NOW FED STIMULUS HOPES ARE BACK ON; EUROPE ENDS WINNING STREAK

US equities fought back after a four-session slide ending the week on a high as hopes for monetary expansion received a boost after Fed chairman Bernanke said the central bank has more tools in its kitty to stimulate economic activity.

Remember, there was no promise of any QE but merely the mention that additional ammunition allegedly resides in the Fed’s toolkit. We’ve seen that all month as sentiment swung between “will” or “won’t” there be more stimulus, and markets simply reacted to those words when found in headline news. As a result, the Fed may never have to actually do anything but simply utter the word that Wall Street clamors.

The Dow Jones Industrial Average (DJIA) surged 0.8 percent, still off 0.7 percent for the week. Breadth within the blue-chip index turned positive after four down days with only four of its 30 components finishing lower. The S&P 500 Index (SPX) rose 0.7 percent, down 0.5 percent for the week while the NASDAQ Composite (COMP) added 0.5 percent, down 0.2 percent over last Friday.

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Weekly StatSheet For The ETF/No Load Fund Tracker Newsletter – Updated Through 08/23/2012

Ulli ETF Tracker Contact

ETF/Mutual Fund Data updated through Thursday, August 23, 2012

If you are not familiar with some of the terminology used, please see the Glossary of Terms.

 

1. DOMESTIC EQUITY MUTUAL FUNDS/ETFs: BUY — since 10/25/2011

The domestic TTI broke through its long-term trend line generating a Sell for this area effective 8/9/2011. Over the recent past, we’ve seen the TTI hovering slightly below and above this dividing line between bullish and bearish territory. The clear break to the upside occurred on 10/24/11 and, effective 10/25/11, a new Buy signal for domestic equities went into effect.

As of today, our Trend Tracking Index (TTI—green line in above chart) has broken above its long term trend line (red) by +2.98%. A break back below it will generate a Sell signal to move out of all domestic equity positions. Be sure to tune into my blog for the latest updates.

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