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

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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 11/11/2012.

Some fireworks went off after Election Day pulling the major market indexes sharply lower with the S&P 500 surrendering 2.4% over the last week.

With just about all serious economic issues having been postponed due to the election battle, reality hit Wall Street that all may not be well domestically and internationally causing the sudden slide in the market.

Whether this is the beginning of a move back into bear market territory remains to be seen; so far our Trend Tracking Indexes (TTIs) have stayed on the bullish side of their respective trend lines but have weakened considerably.

To me, more downside momentum can easily be generated by external forces such as the European debt crisis, or more specifically Greece, which is due to run out of money on November 16. And, of course, Spain is not that far behind. If the funding spigot gets shut off, we will have a guaranteed disaster on our hands that will affect markets worldwide.

Over past week, we covered the following:

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Will US Fiscal Headwinds Slow Down Growth In Q4?

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Despite the looming ‘fiscal cliff,’ the US economy is unlikely to fall back into recession in 2013, especially when some good numbers are coming out towards the end of the year, says Julian Callow, chief international economist at Barclays Capital.

US economists have recently upgraded growth forecasts to an annual clip of 2.8 percent from an earlier pace of 2 percent for the fourth quarter, signaling a pick up in growth. So, heading into 2013, we are witnessing a relatively sustained economic expansion in the US economy; and with the Fed clearly behind with full support, it’s just a question of magnitude and measures, Julian said. It’s unlikely the Congress will do something suicidal though there will be a lot of brinkmanship involved in the negotiations leading up to the fiscal deal, he added.

President’s Obama’s biggest challenge will be to negotiate a long-term deal rather than trying out a short-term fix. The US can still manage an annual growth of 1.5 percent in 2013, which translates into about $200 billion in additional goods and services, he said. If the US goes over the fiscal cliff, i.e. budget cuts and tax hikes are implemented, global GDP – which is currently running at 3/3.25 percent, will slow down. However, with China growing at over seven percent this year and hopefully possibly managing to clock more than seven percent next year after the current political uncertainty over leadership transition gets over, the impact should be lower, Julian noted.

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New ETFs On The Block: Pyxis/Iboxx Senior Loan ETF (SNLN)

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Pyxis, the Dallas-based money manager that spun off from Highland Funds Asset Management at the beginning of the year, is making its first foray into the ETF space with its Pyxis/iBoxx Senior Loan ETF (SNLN).

Highland already has a lineup of 20 open-ended mutual funds and traditional closed-end funds while Pyxis aims to serve up access to senior loans through an ETF strategy that will attract investors looking for income without taking on too much risk in this time of low interest rates.

The fund will replicate the Markit iBoxx USD Liquid Leveraged Loan Index and will invest primarily in below investment-grade senior loan portfolios of domestic and foreign corporations and partnerships. To improve liquidity, the fund seeks exposure in the 100 most liquid loans.

SNLN will compete against the PowerShares Senior Loan ETF (BKLN), the only other ETF focused on the senior loan universe. For people unfamiliar with this type of fixed-income instruments, senior loans, also known as leveraged loans, have risk profiles similar to below investment-grade securities and provide debt capital to a company.

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11-09-2012

Ulli Newsletter Archives Contact

ETF/No Load Fund Tracker Newsletter For Friday, November 9, 2012

ETF/No Load Fund Tracker StatSheet

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

https://theetfbully.com/2012/11/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-11082012/

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Market Commentary

Friday, November 9, 2012

MAJOR INDEXES SNAP LOSING STREAK BUT SUFFER THEIR WORST LOSS IN 5 MONTHS; EUROPE SLIPS ON GREECE WORRIES

US equities eked out modest gains Friday spurred by a strong read on American consumer confidence, but all the three major equity averages still finished lower more than two percent for the week.

After starting to the downside on what appeared to be a third straight session of losses, stock indexes recovered as preliminary consumer confidence data from the University of Michigan for November came in at 84.9, topping forecasts of 82 and up from 82.6 in October.

The Dow Jones Industrial Average (DJIA) nudged up 4 points to 12,815, snapping a two-day losing streak. Breadth within the 30-stock benchmark turned positive with winners outpacing losers 18 to 12 on the blue-chip index.

Logging a 2.1 percent weekly loss that also marked its third straight down week, the Dow posted its worst weekly performance in nearly five months.  The S&P 500 Index (SPX) rose 2 points to 1380, still down 2.4 percent for the week.

The benchmark 10-year Treasury yield was little changed at 1.61 percent while yield on 30-year Treasury bonds fell one basis point to 2.75 percent. 10-year yields have dropped 10 basis points on the week while 30-year yields are at a two month low.

The US dollar advanced for the third day as worries over a potential political gridlock over fiscal policies spiked demand for safer assets. The euro edged lower as hopes for an early decision to release Greece’s next tranche of bailout money faded after news reports suggested continued differences among euro-zone’s finance ministers that may push back a decision until later this month.

Meanwhile, European stocks retreated Friday, capping losses at 1.7 percent in an otherwise volatile trading week. The pan-European Stoxx Europe 600 index slipped 0.1 percent, extending losses into the third straight day. Early optimism over strong industrial output and retail sales in China was offset by growth worries over France.

A monthly report from the Bank of France said Europe’s second largest economy runs the risk of slipping into recession as economic output may decline by 0.1 percent in the fourth quarter.

Also Greece’s parliament will vote Sunday on its 2013 budget after approving an additional EUR 13.5 billion in austerity measures earlier this week. The Athens General Index jumped 0.9 percent, cutting losses to 0.1 percent for the week.

Dragged down by banking shares, the DAX 30 index lost 0.6 percent in Frankfurt, off 2.7 percent for the week. Commerzbank AG sank 6.9 percent while Deutsche Bank lost 2.4 percent.

In the ETF space, the SPDR S&P Biotech ETF (XBI) surged 2.19 percent as biotech, semiconductor and internet stocks rallied today. Also energy commodities traded mostly higher as oil prices breached the $86 a barrel mark. The United States Oil Fund (USO) finished 1.44 percent higher for the day.

The Teucrium Soybean Fund (SOYB) tumbled 2.49 percent after US Agriculture Department predicted a rise in production, pushing soybean futures price crashing.

Our Trend Tracking Indexes (TTIs) headed closer to a potential trend line break, which so far did not happen. Any more slipping and sliding in the indexes will most certainly end this bullish domestic cycle and very likely the international one as well.

Stay tuned for the latest details, which I will post on a daily basis.

We ended the week as follows:

Domestic TTI: +0.72% (last week +1.34%)

International TTI: +1.45% (last week +3.24%)

Have a great week.

Ulli…

Disclosure: No holdings in ETFs discussed above

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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 Joe:

Q: Ulli: With the markets being in a tizzy fit and your TTIs getting close to triggering a ‘Sell,’ do you recommend establishing new positions for new money at this time?

A: Joe: Here’s how I handle it in my advisor practice. Since new money comes in all the time, I select the portfolios I want to use (right now, it’s some variation of model #2) and establish all bond positions, since they are in a “buy” mode.

Depending on the client, I may even set up a small equity holding to get started. I will now wait to see how market direction plays out before investing the balance in equity ETFs.

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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, November 9, 2012

Ulli ETF Tracker Contact

ETF/No Load Fund Tracker StatSheet

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

https://theetfbully.com/2012/11/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-11082012/

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Market Commentary

Friday, November 9, 2012

MAJOR INDEXES SNAP LOSING STREAK BUT SUFFER THEIR WORST LOSS IN 5 MONTHS; EUROPE SLIPS ON GREECE WORRIES

US equities eked out modest gains Friday spurred by a strong read on American consumer confidence, but all the three major equity averages still finished lower more than two percent for the week.

After starting to the downside on what appeared to be a third straight session of losses, stock indexes recovered as preliminary consumer confidence data from the University of Michigan for November came in at 84.9, topping forecasts of 82 and up from 82.6 in October.

The Dow Jones Industrial Average (DJIA) nudged up 4 points to 12,815, snapping a two-day losing streak. Breadth within the 30-stock benchmark turned positive with winners outpacing losers 18 to 12 on the blue-chip index.

Logging a 2.1 percent weekly loss that also marked its third straight down week, the Dow posted its worst weekly performance in nearly five months.  The S&P 500 Index (SPX) rose 2 points to 1380, still down 2.4 percent for the week.

The benchmark 10-year Treasury yield was little changed at 1.61 percent while yield on 30-year Treasury bonds fell one basis point to 2.75 percent. 10-year yields have dropped 10 basis points on the week while 30-year yields are at a two month low.

The US dollar advanced for the third day as worries over a potential political gridlock over fiscal policies spiked demand for safer assets. The euro edged lower as hopes for an early decision to release Greece’s next tranche of bailout money faded after news reports suggested continued differences among euro-zone’s finance ministers that may push back a decision until later this month.

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Weekly StatSheet For The ETF/No Load Fund Tracker Newsletter – Updated Through 11/08/2012

Ulli ETF StatSheet Contact

ETF/Mutual Fund Data updated through Thursday, November 8, 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 +0.71%. 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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