US Stocks Get Clobbered As Greece Heads Towards Euro Exit; International TTI Signals ‘Sell’

Ulli Market Review Contact

[Chart courtesy of MarketWatch.com]

US equities marched south Monday with all three indexes losing about one percent as markets remained concerned over the future of the currency-union in Europe and the safety of American banks following JP Morgan’s unexpected 2-billion trading loss.

Greece’s political parties struggled to form a coalition over the weekend, fuelling fears of a re-election that is expected to swing towards the extreme lefts who have vowed to reverse the country’s austerity measures, risking its continuation in the eurozone. Long-term, that would be the best solution for Greece.

The Dow Jones Industrial Average (DJIA) tumbled 125.25 points while the S&P 500 Index (SPX) lost 19.64 points to settle at 1338.35 with the financial sector faring the worst among the 10 business groups.

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ETFs/Mutual Funds On The Cutline – Updated Through 5/11/2012

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 274 (last week 309) 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. 46 ETFs (last week 58) have managed to move into in bullish territory after the recent run up.

The third report covers Mutual Funds on the Cutline. There are currently 748 (last week 789) above the line and 113 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 5/13/2012

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 5/13/2012.

Much uncertainty about the worsening European debt crisis pulled the benchmark S&P 500 index lower by some 1.2% for the week. Overall, upward momentum has slowed, especially in the international area as shown by my International Trend Tracking Index (TTI), which is now hovering on the plus and minus side of its long term trend line by a very small percentage.

Towards the end of the week, news of JPM’s trading losses, so far estimated to be in the $2 billion range, caused nervousness on Wall Street. The big question in my mind is whether that was an isolated incident or if there is more to come. I my guess is the latter but it may take some time for the other cockroaches to emerge.

This week, we covered the following:

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The Next Crisis: Will Spain Sink The European Union?

Ulli Market Review Contact

As the chatter of Greece exiting the eurozone gets louder, questions are being raised about Spain and Italy requiring bailout money from the European Central Bank to avoid a sovereign default.

The Spanish and Italian banks have used the ECB’s cheap three-year loan to buy government debt, which ostensibly is a carry trade – borrow cheap and lend at a higher rate.

Spanish banks have borrowed €220 billion under the ECB’s LTRO program and between December and April purchased €85 billion in sovereign papers. Some of the cash has been used to refinance private debts falling due, leaving the region’s banks with €82 billion in free cash. That is twice the €41 billion Madrid would still require to raise this year. If domestic lenders agree to swap maturing government debts, Spain may actually require €20 billion in new funding.

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Taking Stock: Market Vectors Emerging Markets High Yield Bond ETF (HYEM)

Ulli Bond ETFs Contact

Van Eck Global, the managers of the Market Vector range of exchange traded funds, have launched a new emerging markets high yield bonds this week, its third high-yield bond ETF in about a month.

The money manager launched the new fund as advisors and investors have started to diversify their fixed-income allocations to create layered risk levels in their portfolios, spiking the demand for alternative fixed-income funds.

The Market Vectors Emerging Markets High Yield Bond ETF (HYEM) will track the BofA Merrill Lynch High Yield U.S. Emerging Markets Liquid Corporate-Plus Index, which comprises of 272 US-dollar denominated non-investment grade bonds issued by 162 non-sovereign emerging market issuers including corporate from Argentina, Azerbaijan, Barbados, Brazil, Chile, China, Colombia, Egypt, El Salvador, Hong Kong, India, Indonesia, Israel, Jamaica, Kazakhstan, Mexico, Nigeria, Oman, Peru, the Philippines, Poland, Russia, Saudi Arabia, Singapore, South Africa, South Korea, Turkey, Ukraine, United Arab Emirates and Venezuela.

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05-11-2012

Ulli Newsletter Archives Contact

ETF/No Load Fund Tracker Newsletter For Friday, May 11, 2012

ETF/No Load Fund Tracker StatSheet

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THE LINK TO OUR CURRENT ETF/MUTUAL FUND STATSHEET IS:

https://theetfbully.com/2012/05/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-05102012/

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Market Commentary

Friday, May 11, 2012

JP MORGAN LOSS WEIGHS ON STOCKS; EEME SHINES, IYG FADES

US stocks finished the week lower for the second consecutive week on Friday as banking giant JPMorgan Chase announced an unexpected $2-billion trading loss, sending investors running for cover. I still stick to my comment from yesterday that there is never just one cockroach, and we’ll have to wait and see if others appear as time goes on.

A Labor Department report showing producer prices dropped 0.2 percent in April, with core prices excluding energy and food rising 0.2 percent did little to ease investor fear. In a longest stretch of gains since 1998, Treasuries rose for the eighth week in a row as the Greece political circus continued, spiking demand for US safe-haven assets as risk appetite diminished. A four-year high reading of a key consumer confidence index in May did precious little to calm nerves.

The Dow Jones Industrial Average (DJIA) slipped 34 points to finish the week at 12,820.60, JP Morgan Chase (JPM), the index’s heaviest component posted a sharp 9.3 percent decline.

The S&P 500 Index (SPX) shed 4.60 points to settle at 1353.39, off 1.2 percent over last week, with. Financials are faring the worst among the 10 industry groups.

The NASDAQ Composite Index (COMP) climbed up fractionally to close at 2933.82, off 0.8 percent over last Friday.

Wall Street’s biggest bank (by balance sheet) JP Morgan Chase’s surprise loss drove the benchmark 10-year bonds higher for the eighth straight week, with yields dropping three basis points to 1.84 percent. Yields on 30-year bonds dropped 0.03 percentage points to close the week at 3.01 percent.

ETFs in the news:

Among the day’s top gainers, the MSCI Emerging Markets EMEA Index Fund (EEME) came out tops. This fund tracks the MSCI Emerging Markets EMEA Index, which in turn is designed to measure the performance of equity securities in emerging countries in Europe, Africa and the Middle East; it added 2.11 percent.

The S&P 500 VIX Short-Term Futures ETN (VXX) remained among the day’s top winners, as indexes swung wildly between gains and losses before settling in the green. Despite today’s gain, the fund is down 48 percent since the beginning of 2012. This ETF is not for the faint hearted and discretion is required.

As the financial sector slipped on JP Morgan’s loss news, the iShares Dow Jones US Financial Services Index Fund (IYG) dropped 1.48 percent. JP Morgan blamed the surprise loss to sour trades, leaving investors worried over similar losses from other banks. This ETF will be an interesting watch as the banking-sector story slowly unfolds.

Our Trend Tracking Indexes (TTIs) slipped as well, with the domestic one remaining above the line. The International TTI has been hugging its trend line on both sides but eased below it by a small margin.

Here are this week’s closing numbers:

Domestic TTI: +3.26% (last week +3.99%)

International TTI: -0.18% (last week +1.53%)

As I posted yesterday, I will wait with issuing a ‘Sell’ signal until the International TTI clearly drops into bearish territory and remains there for a few trading days.

Have a great week.

Ulli…

Disclosure: No holdings

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READER Q & A FOR THE WEEK

All Reader Q & A’s are listed at our web site!
Check it out at:

http://www.successful-investment.com/q&a.php

A note from reader Sam:

Q: Ulli: Recently, you sold VEU after it had dropped 7% from its high, but in the model portfolios you still hold DBC, when it’s lost more than 9%. Care to share your reasoning?

A: Sam: Sure; remember, different asset classes have different sell stop points. For broadly diversified domestic and international funds/ETFs, I use 7%.

For more volatile sector/country funds/ETFs, I use 10% and for bond ETFs, I use 5%. DBC falls in the sector fund classification.

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https://theetfbully.com/personal-investment-management/

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Back issues of the ETF/No Load Fund Tracker are available on the web at:

https://theetfbully.com/newsletter-archives/