Major Market ETFs Rally On Better Retail Sales Data; URA Rises, VXX Sinks

Ulli Market Review Contact

[Chart courtesy of MarketWatch.com]

US stocks rallied late Tuesday with the NASDAQ Composite Index topping the 3,000 level for the first time since Nov. 15, 2000, ahead of an earlier-than-due release of Federal stress-test results of the nation’s biggest banks.

JP Morgan Chase’s announcement of higher dividends, better retail sales number in February, and the Fed’s decision to continue with record low interest rates, helped today’s rally. Treasuries tanked as yields rose to 2012 highs, as the Fed raised its assessment of the economy and refrained from fresh measures to lower borrowing costs.

The Dow Jones Industrial Average (DJIA) reclaimed the 13,000 mark, adding 1.7 percent to close at 13,177.33, its biggest single-day gain since last December.

The S&P 500 Index (SPX) climbed 1.8 percent, to 1395.96, with the financial sector leading the rally among the 10-sector index ahead of stress-test results.

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Equity ETFs Remain Range-Bound As Investors Remains Skeptical; CORN Grows, KWT Flickers

Ulli Market Review Contact

[Chart courtesy of MarketWatch.com]

Equity ETFs remained range-bound with blue-chips advancing for the fourth day Monday, ahead of the Federal Reserve’s monetary policy meeting and a raft of economic data releases this week, which are expected to support the case for a rate hike and undermine the requirement for another round of assets purchase by the Fed.

The Dow Jones Industrial Average (DJIA) added 0.3 percent on the day to end at 12,959.71, its fourth day of gains since Jan. 20, while the S&P 500 Index (SPX) rose 0.22 points to 1352.63, also its fourth straight day of gains with defensive areas like utilities, consumer staples and telecom advancing the most.

Treasuries lost further ground as speculation of QE3 eased and an auction of three-year notes evoked weaker-than-expected response. The Treasury is due to sell $21 billion 10-year notes tomorrow when the FOMC meets. Markets remain edgy ahead of the Fed’s stress-test results of the nation’s banks on Thursday.

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ETFs/Mutual Funds On The Cutline – Updated Through 3/9/2012

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 356 (last week 365) 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. 76 ETFs (last week 80) 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 814 (last week 818) above the line and 47 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

Last Week In Review: ETF News And Blog Posts To 3/11/2012

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 3/11/2012.

Last Tuesday’s sell off took the starch out of upward momentum but, so far, it turned out to be a one day pullback, as the major indexes recovered and recouped their losses over the remaining three trading days.

It looks as though we’re inching again towards overhead resistance lurking in the 1,370 area for the S&P 500 and 13k for the Dow Jones Industrials.

While the jobs report was somewhat better than mainstream economists had expected, it’s questionable in my mind whether that is enough to push convincingly through the glass ceiling; a new impetus maybe necessary to accomplish that feat.

This week, we covered the following:

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The Economy Is Gathering Pace; Do We Need Another Round Of QE?

Ulli Market Commentary Contact

The US Federal Reserve didn’t mention about another round of quantitative easing in its latest round of FOMC meeting, leaving many disappointed. Do we really need another round of money supply in the economy? Or will that be the recipe for spiraling inflation, considering that energy prices have stubbornly remained high?

If Joseph Balestrino, fixed-income chief at Federated Investors is to be believed, the US economy can very well do without another round of assets purchase.

The economy is not on fire, but it’s not in bad shape either. The Fed had declared that QE3 was contingent on either the economy going backwards or inflation not rising, and Joe believes none of the conditions are being fulfilled now. He, however, believes that Fed chairman Bernanke may initiate another round of monetary expansion exercise in September.

But doesn’t the extra money in the system encourage better investor participation, since investors have been cautiously optimistic about the economy in general and about the recent stock market rally in particular?

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Should You Consider A Commercial Real Estate ETF Now?

Ulli ETF News Contact

As the economy shows signs of a slow recovery with successive lower unemployment-rate readings and better overall economic numbers, is it time to raise a toast for the real estate sector?

Well, if you look at the US residential property market, the indicators have been mixed with the latest S&P Case Shiller Home Price Index readings dropping by 0.5 percent for the month and 4 percent on the year. On the other hand, existing home sales and inventory levels show a trend reversal with enough indications of a slow but gradual recovery.

The developments in the commercial property market, in contrast, have been more even. The Society of Industrial and Office Realtors CRE Index, though remains lower overall, is moving north while the National Association of Realtors forecasts lower vacancy rates in all segments of the commercial real estate segment.

Investors may consider commercial real estate for diversification purposes as well. Most don’t have any commercial exposure in their portfolios though they are invested in the residential segment through home ownership.

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