Last Week In Review: ETF News And Blog Posts To 11/18/2012

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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 11/18/2012.

More market pain became apparent this week, as the S&P 500 dropped some 1.5% over the past 5 trading days. It could have been a lot worse on Friday, but new hope was given to Wall Street as the Fiscal-cliff talks were considered to be ‘constructive.’ That was enough to pull the indexes out of another deep slump closing green for a change, a color which we have not seen all month when looking at closing prices of the averages.

Of course, that thin hope may disappear in no time when real hard decisions have to be made. I consider these opening meetings as nothing more than after election courtesy. Let’s see how this will play out once it becomes clear that the word ‘compromise’ has different interpretations across party lines.

Over past week, we covered the following:

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One Man’s Opinion: Are Worries About The Fiscal Cliff Over-hyped?

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The US economy grew by 2.3 percent in the second quarter, while the third quarter growth rate has been about three percent, which means average annual growth will be about 2.6 percent in 2012, says James Paulsen, chief investment strategist at Wells Capital Management.

There are so many more parts which are working than they were a year ago. For example, housing has improved significantly over the past 12 months, home prices are on a growth trajectory, bank lending was not existent a year ago but now rising, consumer confidence has hit a five year high, the unemployment rate is coming down, labor force is rising, the debt burdens are at record lows almost. So, a number of things are in place that allows the growth rate to move a little faster, James observed.

Secondly, the economy is still stimulating. There will be some fiscal tightening, but money supply has been growing rapidly, mortgage rates are at record lows, gas prices have been falling and inflation rate has been on the decline – from four percent a year ago to about two today. These are stimulating events that should help the economy in the next year, he noted.

Thirdly, and most importantly, China’s economy is showing signs of bottoming out. The Chinese economy is likely to reaccelerate in 2013 and if the emerging markets start recovering, manufacturing in the US, Germany and elsewhere will also pick up, James added.

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New ETFs On The Block: RBS Launches Five Rogers Commodity ETNs

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Given the weak performance of the stock markets ahead of budget negotiations, many investors are looking for exposure in commodities.

Although there are dozens of ETFs and ETNs in this segment, most fail to deliver adequate returns as they focus on front-month futures and roll contracts continually. This strategy can backfire if markets are in Contango, a condition where future prices are higher than spots prices, i.e. there are more consumers and buyers than sellers.

To overcome this problem, many firms have developed Contango killing products in the past. While these products have met with varying levels of success, legendary commodities trader and China bull Jim Rogers appears to finally turn the tide. Rogers has launched a plethora of commodity focused exchange traded products, which are both equity as well as futures-based in nature. RBS has thrown its weight behind Rogers and has launched five products that offer exposure to commodity indexes bearing the name of the hard assets investor.

These five products provide commodity exposure depending upon global economic cycles. The notes seek to maximize returns when the differential is highest between near-term contracts and further-term future contracts.

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ETF/No Load Fund Tracker Newsletter For Friday, November 16, 2012

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ETF/No Load Fund Tracker StatSheet

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

https://theetfbully.com/2012/11/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-11152012/

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Market Commentary

Friday, November 16, 2012

US EQUITIES SNAP LOSING STREAK, BUT END WEEK LOWER; EUROPE SLIDES FURTHER

US stocks edged higher in late trading trimming weekly losses today as markets turned optimistic about budget negotiations after House Speaker John Boehner said he had constructive discussions with President Obama adding he would accept government spending cuts and tax hikes.

Reversing a four-day losing streak, the Dow Jones Industrial Average (DJIA) climbed 46 points to 12,588, capping weekly losses at 1.77 percent. Breadth within the 30-stock blue-chip index turned positive with gainers outpacing decliners 22 to 8 at the closing bell. The index is down for the fourth straight week, the longest losing stretch since August 2011.

The S&P 500 Index (SPX) added 7 points to finish at 1,360, paring weekly losses to 1.5 percent. Utilities and healthcare paced the gains while Transportation was the sole laggard among its 10 business groups.

Treasuries advanced for the fourth straight week, the longest stretch of rises since July as investors remained worried over budget negotiations before automatic spending cuts and tax hikes come into effect on Jan 1.

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Weekly StatSheet For The ETF/No Load Fund Tracker Newsletter – Updated Through 11/15/2012

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ETF/Mutual Fund Data updated through Thursday, November 15, 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 barely broken below its long term trend line (red) by a scant -0.10%. To avoid a potential whip-saw, a Sell signal to move out of all domestic equity positions will be generated once we have more clearly pierced the line, which may very well happen within the next day or so. Be sure to tune into my blog for the latest updates.

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Last Hour Rally Saves The Day For Equities; Domestic TTI Barely Breaks The Trend Line To The Downside

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[Chart courtesy of MarketWatch.com]

Domestic stocks extended losses for the fourth straight session Thursday as investors weighed negative data on employment and manufacturing activity, and political uncertainties overseas.

A Labor Department report revealed 439,000 Americans filed for unemployment benefits last week, a sharp increase of 78,000 that analysts attributed to Hurricane Sandy while a separate monthly manufacturing survey by the Federal Reserve Bank of Philadelphia showed economic activity declined in November.

Also, manufacturing activity slowed down in the New York region this month as Hurricane Sandy disrupted power supply and curtailed activity, another report showed. Meanwhile, inflation remained subdued at 0.1 percent in October, the Consumer Price Index showed.

The major indexes were in negative territory for most of the day, but managed to cut losses during the last hour as the chart above shows.

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