ETF/No Load Fund Tracker Newsletter For Friday, December 23, 2011

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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/2011/12/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-12222011/

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Market Commentary

Friday, December 23, 2011

EQUITY ETFS GET HIGHER RETURNS FROM SANTA BEFORE XMAS

Amidst all the holiday cheer, the major indexes took a step away from reality and embraced the festive atmosphere. Markets worldwide generally had an uplifting day with the S&P 500 rising 0.90% while Europe indices also posted modest gains. The S&P 500 is in the green for 2011, but with one week of trading left in the year, anything can happen to send it back into the red.

The Euro barely moved against the dollar, finishing at $1.30/Euro. And apparently investors have seemed to regain some of their risk appetite as the 10-year Treasury increased to a yield of 2.03%. However, I don’t share the same sentiment about taking on more risk with the exception of a small, select number of less volatile equity/sector ETFs.

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Weekly StatSheet For The ETF/No Load Fund Tracker Newsletter – Updated Through 12/22/2011

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ETF/Mutual Fund Data updated through Thursday, December 22, 2011

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 +2.08%. Be sure to tune into my blog for the latest updates.

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Major Market ETFs Gain a Little More

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[Chart courtesy of MarketWatch.com]

European uncertainty continues to hang over us, but that didn’t stop major market ETFs from trending up as the S&P 500 rose 0.83%. However, the Euro is still at $1.31/Euro, indicating that risk perception remains high.

In the U.S., the bleak unemployment picture seemed to hit a bright spot. Unemployment claims this past week hit their lowest level in 3 ½ years. While this is positive, we need to see a steep drop in the unemployment rate to have any faith that we’re on a path toward recovery.

And although Congress can’t agree on how to cut the deficit, the House has finally given in to allow a payroll tax cut extension. This might help small businesses especially, but will have a minimal positive dent on markets at best.

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Waiting For A Big Move As ETFs Show Little Action

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[Chart courtesy of MarketWatch.com]

Not a lot of movers and shakers in the market today as the S&P 500 finished up only 0.19%.

While most of the indexes hovered near zero, tech got pretty battered as the NASDAQ fell 0.99% based on Oracle’s weak earnings, having a domino effect on other tech stocks such as IBM.

Although I hesitate to say we’re in risk-off mode, the VIX reached its lowest level since late July, ending just below 22. On one hand, this can be interpreted as a positive sign to gain an entry point into selective equities. Nevertheless, I believe markets will start swinging more again once the holiday season is over and volume picks up again.

Trying to catalyze credit flow, the ECB gave over $645 billion in long-term loans to European banks. With liquidity drying up and banks hesitant to lend, these loans will hopefully provide the fuel to get the European economy up and running again. If anything, we’re seeing evidence of a financial system hampered by contagion and starved for funds.

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7 ETF Model Portfolios You Can Use – Updated through 12/20/2011

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Thanks to yesterday’s snap back rally, the S&P 500 managed a 1.2% gain for a change since my last ETF Model portfolio report. We came dangerously close to breaking the psychologically important 1,200 level but managed to avoid a drop below it for the time being.

With our portfolios holding a large cash position supported by some bond and sector ETFs, any sharp move in the stock market will only have a small directional effect.

In other words, we are predominantly in capital preservation mode, which I believe to be the best course of action at this time when considering that most equity ETFs are residing below their respective long-term trend lines (see most the most recent cutline reports) and therefore on the bearish side of the equation.

Take a look at the latest update:

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Big Upswing for Equity ETFs, But There’s Still No Sigh Of Relief

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[Chart courtesy of MarketWatch.com]

Markets suddenly were in a bullish mood today as indices worldwide moved to the upside. The S&P 500 jumped 2.98% while European indices such as the DAX gained 3.11%. However, the Euro didn’t move much against the dollar, ending at $1.31/Euro.

With equity ETFs gaining, bond ETFs didn’t fare as well. The 10-year Treasury had a large price decline, resulting in a yield of 1.92%. Yet, this doesn’t detract from the fact that there is still plenty of risk on the table. I believe that today was a momentary blip (we’ve seen those before) that is unlikely to persist.

The big announcement of the day was better than projected U.S housing data. According to the Commerce Department, there were 685,000 new homes last month, a 9.3% increase from October. This is certainly a positive indicator for the economy, but there is still a lot to overcome, as seen in this past Sunday’s 60 Minutes housing piece.

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