Equities Rise On Fed Stimulus Hopes; TAN Soars, VXX Drops

Ulli Market Review Contact

[Chart courtesy of MarketWatch.com]

Domestic equities surged more than one percent Tuesday, wiping off losses suffered Monday, as investors took a cue from Europe’s peripheral markets after Spanish bonds came off Euro-era record highs on speculation the Federal Reserve and other central banks will restart asset purchase programs. Sure, we’ve heard that one before resulting in very short-term effects.

Treasuries retreated as Wall Street traders remained upbeat on another round of monetary stimulus to boost a faltering economy. The Dow Jones Industrial Average (DJIA) zoomed 162.57 points, wiping out Monday’s 142.97 points loss. All but one of the 30-component blue-chip-index finished lower for the day.

The S&P 500 Index (SPX) added 15.25 points with materials and financial gaining the most among the 10 business groups. The NASDAQ Composite Index (COMP) gained 33.34 points to settle at 2843.07.

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Equity ETFs Drop As Spain Rescue Disappoints And Greece’s Election Looms Large; VIXY Pops, GAZ Crashes

Ulli Market Review Contact

[Chart courtesy of MarketWatch.com]

US stocks swung wildly Monday giving up early gains to close sharply lower following the best week of the year as investors remained concerned over the upcoming Greek elections and optimism over Spain’s $125 billion bank bailout-deal fizzled on worries that the benefits will not be sustained.

The treasury 30-year bonds pushed higher for the first-time in six days after Spanish yields surged to 6.5 percent over fears that the Iberian nation would be soon locked out of the capital markets, forcing it to seek external help.

If you find these feeble attempts to rescue Spain (and others) confusing, just like Wall Street does, you might want to review this short video from ZeroHedge explaining the ins and outs of the debt circus being presented in Euroland. This should clear up any misconceptions you may have.

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ETFs/Mutual Funds On The Cutline – Updated Through 6/8/2012

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 216 (last week 92) 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. 33 ETFs (last week 14) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 521 (last week 126) above the line and 340 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 6/10/2012

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 6/10/2012.

Wishful thinking and continued hope that the Europeans will finally get their act together, and rescue Spain from its severe predicament, supported market momentum as the recent slide turned into a Viagra move off the lows.

Whether this snap-back will simply turn out to be another dead cat bounce is too early to tell, as next week’s Greek elections and the Spanish financial audits will sure play a role in future market direction.

Looking at the big picture, my guess is at this time that the financial implications of a Spain bailout are too severe in terms of magnitude, especially when considering that Italy is waiting on deck. While there may be some initial euphoria about a potential solution, I think any market bounce will be of short duration.

This week, we covered the following:

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New ETFs On The Block: The BNP Paribas STREAM S&P Dynamic Roll Global Commodities Fund (BNPC)

Ulli Coomodity ETFs Contact

The latest entrant in the ETF industry is French banking giant BNP Paribas. The French bank has launched an exchange-traded commodity fund that is based on a contango-fighting strategy, i.e. it tries to minimize negative impact of the roll process when futures markets are in contango while maximizing yields from rolling futures contract when the market experiences backwardation.

The BNP Paribas STREAM S&P Dynamic Roll Global Commodities Fund (BNPC) will replicate the broad-based commodities futures index, the S&P GSCI Dynamic Roll Excess Return Index, which uses a flexible methodology that rebalances the portfolio depending upon market conditions.

The benchmark index includes two dozen commodities including many products from energy, precious metals, base metals, grains and livestock with a major bias in the energy sector. Brent Crude and WTI Crude nearly make up for half of the portfolio (48 percent) with gasoline, heating oil and natural gas making up another 20 percent.

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06-08-2012

Ulli Newsletter Archives Contact

ETF/No Load Fund Tracker Newsletter For Friday, June 8, 2012

ETF/No Load Fund Tracker StatSheet

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

https://theetfbully.com/2012/06/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-06072012/

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Market Commentary

Friday, June 8, 2012

MAJOR MARKET ETFS POST BEST WEEKLY GAIN OF THE YEAR; EWP RISES, VIXY CRASHES

US stocks headed higher Friday to extend gains for the fourth straight day and capping their best week of the year amid rumors that Spain will officially request for bailout funds for its stricken banks on Saturday, and Europe will move decisively to reign in its sovereign debt crisis.

Yeah right! Past experience with these types of rumors has led to market disappointment, as the Europeans have repeatedly displayed an uncanny ability demonstrating that there is a huge discrepancy between a meaningless announcement and decisive action.

Treasuries closed lower for the week as risk sentiments improved over a Commerce Department report that showed trade deficit narrowed in April with imports falling faster than exports as a soft economy slowed down demand, cutting investor-appetite for safe-haven assets.

The Dow Jones Industrial Average (DJIA) climbed 93.24 points to close at 12,554.33, up 3.6 percent over last Friday. The S&P 500 Index (SPX) added 10.67 points to finish at 1325.66, gaining 3.7 percent for the week with nine out of ten components rising among the index’s 10 business groups. Financials and telecommunications fronted the winners list while energy declined.

The NASDAQ Composite Index (COMP) added 27.40 points to settle at 2858.42, up four percent for the week.

Treasuries trimmed earlier gains after a report from the US Commerce Department showed wholesale stockpiles in April grew twice as fast as in March. The yield on the benchmark 10-year Treasury note finished one basis point lower at 1.63 percent after falling as much as eight basis points earlier. Yield on 30-year bonds remained unchanged at 2.75 after tumbling nine basis points during the day’s trade, but still up 23 basis points for the week.

ETFs in the news:

Markets reacted favorably to speculation that Spain is likely to request a recapitalization of its banks officially on Saturday, despite Madrid maintaining it would wait till audits of its banks are complete.

However, the downgrading of Spanish sovereign ratings by Fitch has added to the urgency of shoring up the country’s banks. If Spain requests a bailout on Saturday, it will certainly help bring down the country’s borrowing costs, assuming the appropriate lifeline is thrown and conditions are accepted, as Madrid remains nearly shut-out from capital markets.

The iShares MSCI Spain Index Fund (EWP) emerged one of the top gainers for the day, adding 2.54 percent for the day. EWP tracks the MSCI Spain index and is heavily biased towards financial services which nearly accounts for 40 percent of its holdings. Its top 10 holdings include three bank stocks.

Better than expected US inventory stockpile proved positive for the homebuilders as higher inventory levels indicate stronger demand and better factory output. The State Street SPDR Homebuilders ETF (XHB) ended in the greens, adding 2 percent on the day

As stocks rallied ahead today, the fear-tracking CBOE Volatility Index continued to slide, losing 2.26 percent for the day. The ProShares VIX Short-Term Futures ETF Profile (VIXY) emerged as one of the biggest decliners, losing 5.43 percent on the day. The Volatility Index has dropped considerably this week, but still remains in the fear zone.

Our Trend Tracking Indexes (TTIs) inched up as well. Domestically, we remain on the bullish side of the trend line while, internationally, we are seeing a temporary improvement from the deep bearish condition.

Here are this week’s closing numbers:

Domestic TTI: +2.08% (last week +1.24%)

International TTI: -3.91% (last week -6.73%)

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 Walt:

Q: Ulli: I do not understand how to use the DD% number. I assume a negative number is bad, a positive number meaning no drawdown has occurred?  Please clarify.

A: Walt: Yes, when an ETF rallies, the DD% will improve and go lower. The 0.00% means that this ETF has just made a new high since the cycle began and is therefore in a solid uptrend…. That’s a good thing.

If you look at the StatSheet every week, you see some DD percentages improving and others worsening depending on market direction.

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WOULD YOU LIKE TO HAVE YOUR INVESTMENTS PROFESSIONALLY MANAGED?

Do you have the time to follow our investment plans yourself? If you are a busy professional who would like to have his portfolio managed using our methodology, please contact me directly or get more details at:

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/