Ulli... The ETF Bully

ETFs/Mutual Funds On The Cutline – Updated Through 7/27/2012

Ulli Monday, 30 July 2012, 6:00 AM 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 265 (last week 224) 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. 48 ETFs (last week 41) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 690 (last week 578) above the line and 171 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.

Last Week In Review: ETF News And Blog Posts To 7/29/2012

Ulli Sunday, 29 July 2012, 8:00 AM 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 7/29/2012.

It was a tale of two markets. The first three days, the bears were in firm control only to be pushed aside by sudden bullish sentiment thanks to well timed jawboning by ECB president Draghi.

As a result, initial losses reversed, and the major indexes closed the week to the upside. Again, it’s important to note that none of what ails Europe has been resolved, but merely old ideas have been put back on the news front burner assuring the bulls that all will be fine and no stone will be left unturned to guarantee the EU survival.

Of course, we’ve all heard this before, which means that after the initial euphoria wears off, the major indexes will shift into retreat mode. QE hopes anywhere you look are enough these days to lift markets. For how long and how far that is the unknown question.

Over past week, we covered the following:

Will The US Q2 GDP Number Trigger Another Round Of Quantitative Easing?

Ulli Sunday, 29 July 2012, 6:00 AM Market Commentary Contact

Friday’s GDP growth number may not be the best, but it’s still much better than the European nations, particularly when compared to the horrible UK number that we saw this week, says Peter Dixon, global equities economist at Commerzbank AG in London.

The economy clearly shows a downside risk since growth momentum slowed down to 1.5 percent in Q2 from 1.9 percent in Q1, but 12 consecutive up quarters show the US economy has been resilient, though it may not be entirely insulated from the European shocks.

It will probably be a little early for the Fed to step in with another round of stimulus measures next week, says Peter, since a much more significant weakening of the economy will possibly convince all FOMC members to vote for another round of QE. However, by mid-September we can expect another round of asset purchases if things don’t improve.

Reacting to European Central Bank President Mario Draghi’s Thursday pledge on preserving the euro, Peter said what Draghi meant may not be in sync with what the European politicians have in mind. Draghi may have meant haircuts for private investors and higher inflation in the region to devaluate Spanish and Italian debt, while politicians may take a very different view on the matter.

New ETFs On The Block: Powershares DWA Small Cap Technical Leaders Portfolio (DWAS)

Ulli Saturday, 28 July 2012, 6:00 AM Small Cap ETFs Contact

Aligning with the latest trend of fund launches that that focuses on smaller issuers, Invesco PowerShares joined the wave by launching the DWA Small Cap Technical Leaders Portfolio (DWAS) last week. The latest offering from the ETF powerhouse comes after a brief hiatus of five months but helps the company expand into more niche segments.

DWAS follows the Dorsey Wright Small Cap Technical Leaders Index (the underlying index) that tracks small companies with powerful relative strength characteristics. The securities for the Index are shortlisted based a proprietary selection methodology that identifies companies demonstrating relative strength characteristics.

Relative strength characteristics are determined by the Index Provider based on the firm’s market performance compared to other companies. Research has shown relative strength can be a powerful indicator of future performance and the previous relative strength funds from PowerShares have all outperformed markets.

The Underlying Index contains approximately 200 companies from a small-cap universe of approximately 2,000 of the smallest US companies that are chosen from a broader set of 3,000 companies. The index is rebalanced and reconstructed on quarterly basis.

The DWAS portfolio is well diversified with 200 individual holdings and is relatively balanced with the top 10 holdings aggregating just 15 percent of total assets under management.

The fund seeks to invest at least 90 percent of assets in small-cap equities, strictly in accordance with the guidelines specified by the index provider. However, DWAS may invest more than 25 percent of net assets in one single firm or groups of companies only to the extent that the underlying index reflects, thus increasing concentration risk.

07-27-2012

Ulli Friday, 27 July 2012, 6:05 PM Newsletter Archives Contact

ETF/No Load Fund Tracker Newsletter For Friday, July 27, 2012

ETF/No Load Fund Tracker StatSheet

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

https://theetfbully.com/2012/07/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-07262012/

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Market Commentary

Friday, July 27, 2012

EQUITY ETFS SURGE FOR SECOND STRAIGHT DAY ON EUROPE HOPE; EWP VAULTS, VIXY IN THE TANK

US stocks rallied for the second consecutive day on Friday, finishing the week higher on hopes the European politicians will take measures to prevent the sovereign crisis from spiraling out of control.

Especially ECB president Draghi’s chest pounding announcement that “believe me, it will be enough,” as he discussed bond buying options, along with rumors of a banking license for the yet to be approved/funded ESM, put the fear into the bearish crowd. The end result was a 2-day rally which just about had everyone covering their shorts, which brings up the interesting question as to what will happen once reality sets in after the jawboning effect wears off?

I don’t have that answer yet, but once the usual disappointment about lack of progress sets in, and the markets retreat, who will be setting a floor via new buying if all shorts have covered already? Just food for thought.

Nevertheless, a rally is a rally, and the Dow Jones Industrial Average (DJIA) soared 188 points, finishing above the psychologically significant 13K level for the first time since the first week of May. Within the Dow, all the 30 components closed in green as the blue-chip index added 1.97 percent for the week.

The S&P 500 Index (SPX) rose 26 points to 1385.97, finishing the week 1.71 percent higher. The technology and healthcare sectors gained the most as all the 10 major industry groups advanced for the day.

The Treasury benchmark 10-year yield gained the most in over four months as speculations on European leaders taking effective measures to contain the sovereign debt crisis improved risk sentiments, softening demand for safe have assets.

The 10-year Treasury yield leapt 12 basis points to 1.55 percent as US Q2 GDP data came in at 1.5 percent, beating analysts’ estimate of 1.4 percent. Yield on 30-year bonds soared 15 basis points to 2.64 percent in late afternoon trading, after French newspaper La Monde reported the European Central Bank is allegedly preparing to buy sovereign bonds from the secondary markets in an effort to bring down borrowing costs.

ETFs in the news:

Extending gains for the second straight day, Spain and Italy-linked ETFs progressed the most Friday as investors remained bullish that the ECB will either directly buy bonds from the secondary markets or initiate another round of LTRO to improve the finances of the most battered countries.

The iShares MSCI Spain Index Fund (EWP) surged 6.11 percent after the country’s 10-year borrowing costs sank as low as 6.70 percent during the day’s trade over speculations that ECB president Mario Draghi could meet the head of Germany’s Bundesbank next week to discuss a more aggressive stimulus package.

The iShares MSCI Italy Index Fund (EWI) also pushed ahead, posting a solid 4.85 percent gain. Italy’s 10-year bond yields fell below the 6 percent mark on Friday for the first time since July 20. Improved risk appetite also pushed up advanced-Asia linked stocks.

The iShares MSCI South Korea Index Fund (EWY) gapped higher at opening as sentiment over Europe, the country’s second most important market, continued to improve as the day wore on and finished 3.98 percent on the day.

As risk sentiment improved, volatility evaporated from the markets, dragging the CBOE Volatility Index down 4.73 percent. The ProShares VIX Short-Term Futures ETF (VIXY) tanked, shedding 2.81 percent on the day. Other fear-tracking funds such as the Barclays iPath S&P 500 VIX Short-Term Futures ETN (VXX) also declined, losing 2.70 percent on the day.

Our Trend Tracking Indexes (TTIs) dropped during the early sell-off part of the week and then picked up steam as the major indexes rallied higher:

Domestic TTI: +2.86% (last week +2.73%)

International TTI: -0.41% (last week -2.44%)

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 Jack:

Q: Ulli: With the market activity of the past 2 days, your International TTI must have come within striking distance of a new “Buy” signal. While I don’t think much of this current rally, I am curious as to when exactly you will re-enter the market for this arena.

A: Jack: You are correct. As of today, the international TTI has reached a point that is -0.41% below its respective long-term trend line, which means we are within striking distance of a potential new “Buy.”

To avoid any potential whipsaw signal, I want to see a convincing piercing of the trend line to the upside along with several days of staying power above it. Generally speaking, that translates into somewhere 3-5 trading days above the line in the area of +1%.

While this does not guarantee that a whipsaw will be avoided, it enhances the odds of getting in as upward momentum accelerates.

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

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