Fed Disappoints—US Stocks End Marginally Lower; ECB And Unemployment Numbers On Deck; USO Rises, URA Sinks

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

US stocks ended marginally lower Wednesday as the Federal Reserve decided to hold back another round of asset purchases to boost the economy.

Traders had priced in a Fed move to support the market’s lofty levels even though eight of ten economists surveyed by Bloomberg News were negative on the Federal Reserve initiating further quantitative easing before the next round of FOMC meeting in September.

Markets, however, may witness enhanced volatility tomorrow as the European central bankers begin their monetary policy meeting. It’s now showtime, as ECB head Draghi’s promises of last week better have some meat in them; otherwise, the major indexes may quickly shift into reverse.

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7 ETF Model Portfolios You Can Use – Updated through 7/31/2012

Ulli Model ETF Portfolios Contact

The roller coaster ride continued this past week with the S&P 500 gaining 3% after having lost 1.9% during the prior five trading days.

This past week’s ramp up came as a result of super Mario (Draghi’s) chest pounding about rehashing all the things the ECB is willing to do to assist the Euro crisis, but he was rebuffed later on as Germany simply said “nein.”

Here we are at very elevated levels in the market place based on nothing but wishful thinking waiting for the FOMC to tell Wall Street’s QE addicts later today that a freshly spiked punchbowl is on its way.

Personally, I think that the Fed will refrain from any major QE action until later on this year, or the beginning of 2013, but they may very well extend the low interest rate window from 2014 to 2015, just to appease Wall Street. To my way of thinking, that would be considered a disappointment and, barring unforeseen circumstances, could result in a retreat for the major indexes.

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

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Market Indexes Slip On Uncertainty; Will The Fed/ECB Deliver?

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

Uncertainty and a certain amount of nervousness among traders provided the background for the day, as the major indexes all slid into the end of the month.

There was not much propping up going on as today proved to be a repeat of yesterday’s theme with the indexes hovering slightly above and below the unchanged line.

On the economic side, personal income increased greater than expected while spending was unchanged and consumer confidence surprised to the upside. Summer vacations and the Olympic Games contributed to a lackluster day.

However, this current lull could change in a hurry as all eyes are feasted first on Wednesday’s Fed meeting along with the European Central Bank powow, which is to be followed on Friday by the mother of all economic reports, namely the unemployment figures.

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US Equities Stall After Two-Day Rally; UNG Bursts, KWT Fades

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

US equities remained just about flat with a slight negative bias today, snapping a two-day winning streak as investors chose to hold back ahead of the central bank meetings and monthly jobs report later this week.

The Dow Jones Industrial Average (DJIA) lost 3 points, with the index’s heaviest component JP Morgan Chase (JPM) leading the decliners, slipping 2 percent after Deutsche Bank downgraded it to ‘hold’ from ‘buy’, citing lofty earnings estimates. 16 of the Dow’s 30 components ended in red as the overall breadth turned negative.

After three successive up sessions, the S&P 500 Index (SPX) closed fractionally lower, slipping less than 1 point  with healthcare dropping the most among its 10 business sectors. Telecommunications emerged the day’s biggest percentage gainer.

US Treasuries rose as risk sentiment turned sour amid rumors the probable peripheral bond purchase by the European Central Bank may not be sufficient to halt the current sovereign debt crisis. No surpise there, as this announcement last week was nothing but hot air to begin with since it did not have the support of paymaster Germany.

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

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 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 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:

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