7 ETF Model Portfolios You Can Use – Updated through 8/7/2012

Ulli Model ETF Portfolios Contact

Continued optimism that the ECB would act ‘real soon’ to contain the euro debt crisis powered equities higher over the past week with the S&P 500 closing slightly above the 1,400 level for the first time since May.

Obviously, as is always the case at this time of the year, trading volume has been extremely light, which can easily exaggerate moves in both directions.

As I have said before, we may now have reached ‘goldilocks’ territory, where just about all potential positives have been priced in the markets, and where any disappointment in regards to expected outcome or actions by the ECB/FED will have dire consequences.

I believe that there is limited upside potential but accelerated downside risk, which could come into play at anytime. That means, unless you are a very aggressive investor, you would be well served by not adding new money at these levels.

Of course, EU politicians in charge could prove me dead wrong by coming up with more new and innovative ways to postpone the inevitable and, as a result, push markets higher; but so be it.

Looking at the big picture, this is the time to be more concerned with capital preservation rather than capital gains as the downside can come in quickly and without much warning.

In the meantime, here’s the latest model portfolio update:

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Equities Edge Higher On QE Addiction—What If The ECB Does Not Deliver?

Ulli Uncategorized Contact

[Chart courtesy of MarketWatch.com]

US equities surged higher Tuesday, extending gains for the third straight day with the S&P 500 clipping the 1,400 mark and the NASDAQ sitting atop 3,000 for the first time in three months on hopes the European Central Bank will intervene soon to halt rising Spanish and Italian borrowing costs.

Let me be clear again. Markets are hovering only at these levels because a total QE package has been priced in; not just in Europe but in the US as well. If this does not come to pass quickly, there is bound to be a sharp trend reversal forthcoming as no improvement in fundamentals has played a role in this rally, but merely QE addiction.

As a result, European stocks traded higher as markets continued to bet that Spain will request a full-blown bailout soon, potentially clearing the way for the region’s yet to be established/funded bailout fund, the ESM, to obtain a banking license that will allow it to buy Spanish bonds from the secondary markets—at least that’s the hope, which has not yet received support from paymaster Germany.

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Major Indexes Extend Weekending Rally Even As Europe Dithers; TAN Shines, VIXY Fades

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

Major market indexes closed higher Monday extending Friday’s rally as investors remained positive over news of lower Spanish and Italian borrowing costs and a stronger-than-expected jobs report last Friday.

The Dow Jones Industrial Average (DJIA) rose 21 points paring the day’s 91-point gain. Within the Dow, the breadth remained positive with 19 of the index’s 30 stocks ending in the expansionary territory.

The S&P 500 Index (SPX) climbed 3 points with technology and materials outperforming and utilities lagging among its 10 business sectors.

US Treasuries remained largely unchanged despite rising earlier in the session amid hopes the European Central Bank will intervene to assist growth even as political differences in Europe continue to aggravate the region’s crisis.

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ETFs/Mutual Funds On The Cutline – Updated Through 8/3/2012

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 283 (last week 265) 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. 55 ETFs (last week 48) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 689 (last week 690) above the line and 172 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 8/5/2012

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 8/5/2012.

In a repeat from the prior week, the S&P 500 dropped four days in a row only to make up all and then some on Friday ending the past five trading days slightly to the plus side.

It was one out of two big events with a positive spin, namely the employment report that came in not great, when looking at the big picture, but better than expected. After the Fed and Draghi disappointment a couple days earlier, this one data point was sufficient to please the bulls into staging a comeback.

As I pointed out Friday, since the Fed is looking for economic weakness to justify more QE, this may have given them a new timeline to delay any planned new program. How well that will go over with Wall Street’s traders remains to be seen.

Over past week, we covered the following:

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RDQ Economics: Mario Draghi Needs To Deliver On His Pledges

Ulli Market Commentary Contact

There has been much disappointment over European Central Bank President Mario Draghi’s apparent failure to initiate another round of bond purchases from the secondary markets to bring down Spanish and Italian 10-year yields.

While Draghi signaled the central bank intends to buy sovereign bonds to bring down borrowing costs, he conceded that differences with the German Bundesbank remain over the ECB’s so-called bond purchase program, the Securities Market Program (SMP).

John Ryding, former Chief Economist at the Federal Reserve Bank of New York and Co-founder of RDQ Economics thinks the markets wanted to hear the ECB announcing restarting its Securities Market Program where the central bank purchases bonds directly from the markets to ‘facilitate the transmission of monetary policies.’

Contrasting the current situation with 2011, Ryding said the former ECB President Trichet didn’t announce any measures to bring down borrowing costs of the peripheral states around same time last year.

When markets melted subsequently in the second week of August 2011, the ECB had to intervene and buy bonds directly from the market through the Securities Market Program to bring down unsustainable borrowing costs.

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