Domestic Equities Continue Their Slide Despite Dead Cat Bounce; Spain Weighs On Europe

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

As violent protests march through Europe, major US ETF stock indexes retreated Wednesday with the S&P 500 tumbling for the fifth day in a row as investors moved to the sidelines and cut exposure in equities.

Markets were spooked following media reports that Catalonian President Artur Mas called for early elections yesterday during with an eye for independence from Madrid. Back home, a Commerce Department report showed new home sales dipped 0.3 percent in August to a 373,000 annual pace, still near a two-year high.

Extending losses for the fourth straight session, the Dow Jones Industrial Average (DJIA) shed 44 points while the S&P 500 Index (SPX) slipped 8 points faring the worst. Only utilities gained among the index’s 10 major business groups. Despite its latest streak of losses, the S&P 500 is up 2.5 percent for the month and 5.4 percent for the quarter ending Friday.

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7 ETF Model Portfolios You Can Use – Updated through 9/25/2012

Ulli Model ETF Portfolios Contact

The S&P 500 meandered in a tight range of 4 points since last week’s ETF portfolio report until yesterday when Caterpillar’s reduced outlook and Fed president Plosser’s remarks about QE-3 not doing much to either economic growth or unemployment combined to knock the major indexes to their largest loss in some 3 months.

The S&P 500 surrendered 1.2% as Plosser’s words of reality struck Wall Street traders who have been riding on cloud nine with their ever optimistic views of the Fed being the savior of the markets. Again, recently the NY Fed published data showing that the S&P 500 would be staggering around the 600 level had it not been for trillions of dollars spent in various stimulus efforts.

The question now, for which I don’t have the answer, yet, is whether yesterdays sell off marks the end of the Fed induced bull phase or whether it’s just a pause in an ongoing uptrend. The latter would be difficult to make a case for as global economic data point to anything but the growth necessary to support the bullish case.

While we wait for clarification via the markets, take a look at the latest update:

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Equities Slump After Phil Fed Talk; Europe Rises On US Data

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

US stocks gave up early gains Tuesday to hit a two-week low despite positive reports on US housing and consumer confidence after Philadelphia Fed President Charles Plosser said the central bank’s latest debt purchase program is unlikely to boost growth.

Equities had moved north earlier after a Conference Board report showed US consumer confidence surged in September while the S&P/Case-Shiller index recorded gains for the fourth straight month.

After rising 61 points earlier on the day on positive data, the Dow Jones Industrial Average (DJIA) slipped 101 points as breadth within the blue-chip index turning overly negative with 25 of the 30 components finishing the day lower.

Extending losses for the fourth straight session, the S&P 500 Index (SPX) fell 15 points with all the 10 business sectors tumbling. Technology and financial sectors fronted the day’s percentage decliners.

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Equity Indexes End Lower Over Europe, Growth Worries; Greece Concerns Surface Again

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

US stocks lost traction Monday with the S&P 500 extending losses over the weekend for the third straight day as data from China and Germany indicated global recovery is slowing while Europe squabbled over the deadline of proposed banking oversight system.

The Dow Jones Industrial Average (DJIA) lost 21 points while the S&P 500 Index (SPX) fell 3 points with technology hitting the ground hardest and utilities outperforming among its 10 business groups.

Treasury yields fell as prices rose for the sixth session in a row after German news agency Der Spiegel reported that Greece’s budget deficit has been estimated at EUR 20 billion by the so-called Troika of the European Commission, the ECB and the IMF, nearly double than previous estimates.

Furthermore, disagreement between Berlin and Paris over the proposed pan-European banking oversight authority underlined the implementation risks the region faces. Ah yes, the infighting goes on…

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ETFs/Mutual Funds On The Cutline – Updated Through 9/21/2012

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 363 (last week 375) 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. 79 ETFs (last week 86) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 830 (last week 838) above the line and 32 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 9/23/2012

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 9/23/2012.

Market volatility slowed down after the Fed’s QEternal announcement last week, but the question in my mind is whether we’re topping here at these levels, as some technicians seem to indicate, or if it’s a base building process that will set the stage for further advances.

As previously mentioned, the fundamentals are simply not there to even justify current equity levels. Interestingly enough, the NY Fed seemed to concur after having released data about a week ago saying the S&P 500 would be meandering around the 600 level had it not been for the various stimulus attempts.

That’s quiet sobering and makes me wonder what the next step will be after QE-3 turns out to not do anything to improve unemployment. Obviously, buying some $40 billion of mortgage backed securities (MBS) per month will have a secondary effect on equities in that some of that created liquidity will find its way into the markets.

However, how long can that disparity of weak fundamentals and artificially propped up equity prices last? Sounds to me that a bubble is in the making, and the eventual bursting of it is pretty much a sure thing; however, that does not make it imminent. As always, the timing is the big unknown; this is why the use of my recommended sell stop discipline is crucial once the inevitable turnaround happens.

Over past week, we covered the following:

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