The Rally Monkey Feasts On Tech Earnings, Bernanke Testimony; PXQ Soars, GDX Sinks

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

US stocks extended gains for the second day in three as earnings by tech stocks lent an assist in helping the rally of the indexes to continue for the time being.

The Dow Jones Industrial Average (DJIA) jumped 103 points with chipmaker Intel Corp (INTC) posting its biggest single-session gain since November 30. Not that Intel performed that great; it was simply not as bad as expected.

The S&P 500 Index (SPX) rose 9 points with the tech sector fronting the day’s gainers while financials and consumer staples were the only decliners among its 10 business sectors. The forecast remains cloudy with Europe presenting a constant worry while the global slowdown adds to general nervousness.

That brings up the question “Is the S&P 500 approaching a top?”

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7 ETF Model Portfolios You Can Use – Updated through 7/17/2012

Ulli Model ETF Portfolios Contact

After the sharp loss during the prior week, the markets managed a turnaround from an oversold condition with the S&P 500 rallying some 1.7% since last week’s ETF model portfolio report.

All eyes were on the Fed’s semiannual testimony yesterday and, while much jawboning went on, traders were disappointed that the next round of QE appeared not to be imminent.

As I have repeatedly said, QE will very likely make an appearance again at some time in the future, probably when the heat is on via a weakening economy and/or a severely slumping stock market. The Fed’s ammunition is limited, in my view, and its usage will need to be carefully considered. Of course, it’s unknown whether it will even have the desired effect or if it will succumb to unintended consequences.

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

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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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