US Equities Bounce Back From Worst Week Of The Year

Ulli Market Review Contact

[Chart courtesy of MarketWatch.com]

US stocks bounced back Monday to break the weeklong losing streak as broader markets rallied, despite social-networking site Facebook plummeting more than 10 percent following its Friday debut.

The S&P 500 snapped its six straight day of losses to post its best session in two months while the Dow made the biggest single-day gain in over a month. Sentiments improved amid optimism that a solution to the ongoing sovereign debt crisis will be found soon. Hmm, I think we have been down that road before.

Treasury 10-year yields dropped to near record lows as German and French finance ministers met to discuss strategies to minimize the possible Greek-exit impact.

The Dow Jones Industrial Average (DJIA) jumped 135.10 points, breaking its streak of six consecutive down days.

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Delayed Posting

Ulli Uncategorized Contact

I will  be traveling all day and won’t have a chance to get today’s market commentary out in a timely manner. I anticipate to get it posted and emailed by midnight PST.

Ulli…

ETFs/Mutual Funds On The Cutline – Updated Through 5/18/2012

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 157 (last week 274) 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. 22 ETFs (last week 46) have managed to remain in in bullish territory after the recent sell off.

The third report covers Mutual Funds on the Cutline. There are currently 312 (last week 748) above the line and 549 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 5/21/2012

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 5/21/2012.

Seems like market behavior has been in repeat mode all month, as the benchmark S&P 500 index got spanked at the tune of -4.3% for the past week. It now has only about 1.49% to go before breaching its widely followed 200-day moving average. Any break below that level is sure to invite more selling.

The DJ Transports so far have been leading the way to the downside by crossing below the respective long term trend line by -1.83%.

Again, I sound like a broken record when reminding you that this is not the time to be a hero, but it is the time for capital preservation, as downside momentum has increased, which is supported by the continuously spreading debt problems in Europe. Follow your trailing sell stops and execute them when they get triggered.

This week, we covered the following:

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Are We Turning Overly Bearish Over Europe?

Ulli Europe Contact

With the endgame in Europe over Greece in sight, are the markets overly worried about a possible euro breakup following Athens’ exit? Karen Olney, head of thematic equity strategy at UBS AG certainly doesn’t think so.

Europe still provides tremendous value and global investors have not capitulated yet though there are specific calendar risks involved (e.g. – Greece election on June 17).  The S&P is down about 7 percent from its recent peaks, which indicates investors haven’t capitulated over a possible euro break up. Other indicators such as put-to-call ratio, bull minus bear and the volatility index reading doesn’t suggest a bear run, though some parts pockets in Europe may have witnessed them.

As far as flight of capital is concerned where investors start to withdraw money from the banks in the peripheral region and deposit them at the stronger core countries, the European Central Bank may have to come out with some kind of deposit guarantee scheme to restore depositor’s confidence. Personally, she doesn’t think that Greece is going to go out of the Euro and would rather continue with the reforms process.

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Taking Stock: Emerging Markets Dollar Denominated Bond ETFs

Ulli Bond ETFs Contact

As global economies continue to stutter with little growth expected from the developed European nations, the emerging markets are expected to drive global growth in the decades to come. Emerging markets currently contribute 30 percent of global GDP which will only grow in the future.

Emerging market bonds are perceived as riskier, which is rewarded by higher returns. However, many emerging markets have improved their fiscal health and their budget deficits are in fact lower than many developed countries, which indicate lower risk. Also inflation risk has diminished greatly for most countries.

The following two ETFs have a diversified portfolio and can be considered by investors with a little more aggressive streak, which to me is a requirement when seeking exposure in the emerging market fixed income area:

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