ETF/No Load Fund Tracker Newsletter For Friday, February 3, 2012

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ETF/No Load Fund Tracker StatSheet

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

https://theetfbully.com/2012/02/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-02022012/

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Market Commentary

Friday, February 3, 2012

BULLS KEEP ROARING FOR DOMESTIC ETFS

Markets continued their upward trajectory, pushing more into bull territory. The S&P 500 jumped 1.46% while the NASDAQ rose 1.61% to hit its highest level since December 2000. The optimism was also shared by European and Asian indices.

More evidence of pendulum behavior in Treasury yields, the 10-year Treasury shot up to 1.95%. Like I’ve said before, although volatility has largely been absent lately, we are in a relatively risky investment environment considering what’s going on in Europe.

In the major news of the day, U.S. unemployment fell to 8.3% in January, the lowest level since February 2009. Nevertheless, there was a decrease in labor force participation, although the Bureau of Labor Statistics says that this is due to population growth among the elderly and young who have lower rates of labor force participation (see page 6 of this). While there’s still a long way to go on the employment front, it’s definitely an encouraging sign.

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Weekly StatSheet For The ETF/No Load Fund Tracker Newsletter – Updated Through 02/02/2012

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ETF/Mutual Fund Data updated through Thursday, February 2, 2012

If you are not familiar with some of the terminology used, please see the Glossary of Terms.

 

1. DOMESTIC EQUITY MUTUAL FUNDS/ETFs: BUY — since 10/25/2011

The domestic TTI broke through its long-term trend line generating a Sell for this area effective 8/9/2011. Over the recent past, we’ve seen the TTI hovering slightly below and above this dividing line between bullish and bearish territory. The clear break to the upside occurred on 10/24/11 and, effective 10/25/11, a new Buy signal for domestic equities is in effect.

As of today, our Trend Tracking Index (TTI—green line in above chart) has broken above its long term trend line (red) by +4.82%. Be sure to tune into my blog for the latest updates.

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Markets Keep Fumbling Along – Equity ETFs On Standby For Jobs Report

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[Chart courtesy of MarketWatch.com]

After some big gains yesterday, markets returned to more stability today. The S&P 500 inched up 0.11% while European indices such as the DAX were in the green. In addition, the Euro was essentially flat, sticking to $1.31/Euro.

Although the VIX dropped over 3% to fall below 18, the 10-year Treasury dipped to a yield of 1.83%. Thus, although we’ve seen a substantial decrease in equities volatility in the last couple months, investors have been flooding into Treasuries. From this standpoint, we’re in a risky investment landscape.

In Europe, Greek debt restructuring discussions have hit a temporary standstill. The question is now whether Greece can implement wage and pension reform, an impediment to its ability to pay down its debt while reducing the country’s competitiveness.

Ultimately, I believe Greece lacks the wherewithal to regain economic strength if it stays in the Eurozone. Even if it receives bailout funds, the looming prospect of a future disorderly default is simply too great a risk.

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January Optimism Seeps Into February For ETFs

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[Chart courtesy of MarketWatch.com]

January’s gains extended into this month as the S&P 500 jumped 1.12% while European and Asian indices were also in bullish mode.

Meanwhile, the Euro rose to $1.32/Euro while the 10-year Treasury rose to a yield of 1.83%. Although market volatility has tempered, there is still plenty of risk lying around.

The head of the IMF recovery effort in Greece, Poul Thomsen, conceded that austerity will only have a negative impact on Greece. Although the debt needs to be cut, stunting economic growth will put Greece back even further. As I’ve previously reiterated, the cards are stacked against Greece and throwing more bailout funds is no guarantee that Greece can get back on a fiscally responsible track.

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7 ETF Model Portfolios You Can Use – Updated through 1/31/2012

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There was not much change in the S&P 500 since last week’s report, as momentum seemed to have slowed down towards the end of the month.

Contributing factors were the never ending European soap opera, mixed U.S. economic reports and simply a market running out of gas after a solid start in 2012.

Our ETF model portfolios fluctuated with their stated objectives, but surprisingly, the moderate version (#4) has been outperforming the aggressive one (#3)

Take a look at the latest ETF Model Portfolio update:

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Major Market ETFs Sitting On The Sidelines

Ulli Market Review Contact

[Chart courtesy of MarketWatch.com]

There wasn’t much moving and shaking in the markets today despite a gloomy atmosphere in Europe. The S&P 500 dipped a mere 0.05%, but the index had its best January performance in 15 years, returning 4.36%. Although it might be The January Effect, please read my recent piece about the importance of a long-term outlook.

Once again, the 10-year yield fell, indicating a risk perception as investors fled to fixed income. Finishing the day at a yield of 1.80%, this is the lowest level in nearly 4 months.

The Greek finance minister has now alluded to a deal where bondholders may have to take a haircut in excess of 70 percent. This is surely a big potential setback from bondholders, but more importantly, it doesn’t mean that Greece’s debt issues will be solved regardless of whether or not it receives additional bailout funds.

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