Domestic Stocks Rise In Choppy Trade On Some Solid Q2 Earnings But No QE; PGJ Sinks

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

Domestic stocks ratcheted higher Monday even though Fed Chairman Ben Bernanke gave no hint that another round of assets purchase is imminent, so investors overcame disappointment and focused on consensus-beating economic reports and positive second-quarter earnings news.

The Dow Jones Industrial Average (DJIA) settled 78.33 points higher in a choppy market after sinking as much as 82 points in early trade and then rising 102 points. Within the 30-component Dow, 26 stocks ended in the expansionary region.

The S&P 500 Index (SPX) added 10.03 points with natural resources, telecommunications and health-care performing the best among its 10 business groups.

Government debt bounced off from almost record lows as demand for safe haven assets eased after the Federal Reserve said June industrial production climbed 0.4 percent against analysts’ 0.3 percent projection.

Bernanke’s testimony before the Senate Banking Committee also kept hopes of further monetary stimulus alive after the central bank chairman said the Fed may consider reducing interest rate on bank reserves, or may purchase mortgage-backed securities, or undertake other appropriate measures to prop up the economy.

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US Equities Leak As Retail Sales Disappoint; CORN Pops

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

US equities finished lower Monday as retail sales dropped unexpectedly for the third straight month, even though economists had forecasted a slight increase, raising concerns about the economic recovery that ultimately pushed down two of the three indexes for the seventh session in last eight.

US Treasury five-year yields fell to a record low of 0.60 percent earlier as investors sought refuge in government securities. Yields may, however, fight back if and that’s a big “if” Federal Reserve Chairman Ben Bernanke calls for more stimulus when he climbs the Capitol Hill tomorrow for his half-yearly testimony before the Senate Banking Committee.

Personally, I don’t believe any stimulus candy will be dished out at this point. Any QE left in the Fed’s arsenal may prove to be of questionable long-term value and will probably be saved for a rainy day when economic data worsens and/or the markets tank big time.

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ETFs/Mutual Funds On The Cutline – Updated Through 7/13/2012

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 196 (last week 235) 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. 34 ETFs (last week 38) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 419 (last week 625) above the line and 442 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 7/15/2012

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 7/15/2012.

A lot of bobbing and weaving in the markets, but Friday’s rebound pulled the major indexes to within the unchanged line.

Europe was relatively quiet, so it was somewhat amazing to see the S&P 500 pull itself out of the hole considering the dire news feed in general. We witnessed a disappointing GDP from China, no stimulus lollipop, the worst consumer sentiment this year and higher inflation.

As a result, the markets rallied; at least for one day. Go figure…

This week, we covered the following:

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Glenmede Investments: The Economy Is In A Growth Scare, But Not Scary Enough For The Fed

Ulli Market Commentary Contact

The June 19-20 meetings records of the Federal Open Market Committee disappointed the markets, as many thought that there was not enough emphasis on quantitative easing. No surprise there as hope of QE has been the only thing propping up the S&P 500 over the past couple of years.

There is a general perception that further asset purchases are “required” by the Fed to kick-start the jobs markets. Jason Pride, director of investment strategy at Glenmede Investments at Philadelphia  thinks even though the economy is in a growth scare, it’s not scary enough for the Federal Reserve to launch another round of assets purchase program.

Agreeing that 10-year yields on US Treasury notes, currently hovering around 1.50 percent, suggest that investors are scared about the economy and have turned defensive to protect capital, he said things are going to be difficult for some time due to slowdown in growth. However, it doesn’t mean growth has turned negative. It’s the negative growth or deflation that the Federal Reserve needs to react to, Jason added.

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New ETF On The Block: Advisorshares Global Alpha & Beta ETF (RRGR)

Ulli Managed ETFs Contact

Bethesda, Maryland-based ETF issuer AdvisorShares has launched another actively managed fund, the AdvisorShares Global Alpha & Beta ETF (RRGR), marking its 15th actively managed fund and the ninth equity product overall.

This is the first product to be managed by the Arizona-based advisory firm Your Source Financial. YSF is run by experienced money manager and popular financial blogger Roger Nusbaum, who has achieved decent fame through “Random Roger’s Big Picture” blog.

The fund intends to invest in a diversified mix of US and global assets with a significant allocation (more than 80 percent) in domestic and international equities, indicating a fairly bullish outlook and looks to outperform major benchmarks such as the Barclays Capital Aggregate Bond Index and the S&P 500 through the firm’s proprietary security selection process that uses a top-down approach of tactical assets allocation that narrows its focus down to sectors, industries or countries and ultimately to individual firms.

This ensures effective risk mitigation and lower volatility since the strategy aims to take advantage of a unique trend or circumstance using assets not correlated to the core holding.

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