Stock Indexes Retreat As Fed Stimulus Hope Fades; Europe Slides On PMI Data

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

Stock indexes tumbled with the Dow industrials posting its biggest fall in more than a month that also marked its fourth down day after global manufacturing data showed signs of slowdown and a US Fed official cast doubts over further accommodative policies soon.

The Dow Jones Industrial Average (DJIA) closed 115 points lower after losing as much as 126 points as breadth within the 30-component Dow turned overwhelmingly negative with 28 stocks ending in red.

Both the S&P 500 Index (SPX) and the tech-heavy NASDAQ Composite (COMP) tanked, down 0.8 percent and 0.7 percent respectively, which was long overdue as the indexes have done nothing but edge higher throughout August without any type of pullback. As I posted repeatedly, the only driver providing any type of momentum has been QE related hope.

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Equities Pare Losses After Fed Minutes; Europe Slumps Ahead Of Greece Meeting

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

Equities trimmed losses Wednesday with the broad market closing near flat after the minutes from the Fed’s last meeting showed many policy makers favored another round of monetary stimulus if the economy failed to show signs of a durable pick up.

The Dow Jones Industrial Average closed 31 points lower after sinking as much as 83 while breadth within the index remained positive with 16 of the blue-chip index’s 30 components closing higher.

A report released by the National Association of Realtors showed existing home sales rose 2.3 percent in July, diminishing chances of QE3 as economic indicators continue to strengthen. So, here we go again as a mixed plate is being served up but hope remains among the QE addicts that the spiked punch bowl will remain on the menu.

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7 ETF Model Portfolios You Can Use – Updated through 8/21/2012

Ulli Model ETF Portfolios Contact

Inching ahead on continued central bank intervention hopes was the mode of operation last week, as the major indexes edged up with the S&P 500 taking out its 2012 high yesterday before selling set in.

With our international TTI having generated a new ‘Buy’ signal, as posted on Monday, and the domestic market heading to higher levels as well, I made some Model ETF Portfolio adjustments, by adding some (more conservative) equity positions back in. They are identified in the matrix as “new purchases.”

I stayed with less volatile holdings due to elevated market levels compared to what might have been my choice at the beginning of a new cycle. I still believe that upside potential is limited as opposed to ever increasing downside risk, although the temporary power of manipulating central banks supporting the markets can never be underestimated, as we’ve seen. The question in my mind is as to how long that condition can last.

Here’s the latest model portfolio update:

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Major Market ETFs Retreat As Declining Tech Stocks Eclipse Euro Optimism; ECB Hope Drives Europe Higher

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

Major Market ETFs retreated today with the S&P 500 climbing down from a four-year high as optimism over the European Central Bank’s possible intervention to limit the region’s contagion was eclipsed by a decline in US equities led by technology stocks.

The Dow Jones Industrial Average (DJIA) fell 0.5 percent, with 22 of the 30 stocks within the index ending in the negative territory. Both, the S&P 500 Index (SPX) and the tech-laden NASDAQ Composite (COMP) retreated, losing 0.4 percent and 0.3 percent respectively.

Investors sought refuge in safe-haven assets, pushing yields of Treasury 10-year notes down during the session after a slump in equities fueled worries whether EU leaders would move fast enough to arrest the region’s debt crisis.

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US Equities Pause Ahead Of FOMC Minutes; International Buy Signal Generated

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

US equities hit the pause button on a placid August trading session, as investors chose to wait ahead of the Federal Reserve’s minutes from the last meeting due out ater this week as worries about Europe offset gains in the technology and banking sector.

The Dow Jones Industrial Average (DJIA), the S&P 500 and the NASDAQ all closed slightly lower. Within the 30-component Dow, the breadth remained negative with 19 stocks ending lower. The S&P 500 and the NASDAQ ended virtually flat, finishing fractionally lower.

Despite today’s non-action, our International Trend Tracking Index (TTI) has now firmly established itself above its respective trend line by +2.33%—at least for the time being. Effective tomorrow (8/21/12) a new Buy signal is issued for that arena. Let me clarify again which mutual funds/ETFs are affected and which are not.

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ETFs/Mutual Funds On The Cutline – Updated Through 8/17/2012

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 334 (last week 324) 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. 68 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 803 (last week 788) above the line and 53 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.