Weekly Round-Up: Indexes Trading At Multi-Year Highs, Fundamentals Looking Better; Europe And Energy Prices Worry

Ulli Market Review Contact

US markets lost some of the sheen on Friday though performance for the week remained steady. Most of the indexes are either at a multi-year high or at  sniffing distance from them. Commodities got some pounding though during the week.

Energy had started off the week on a high with oil hovering around $110 a barrel, a multi-month high. By the end of the week however, prices were down at $106.68 per barrel, a loss of 1.9 percent over the earlier weekly close. The Energy sector also fared worst among all other sectors for the week, shutting shop 1.1 percent lower.

Equity indices hogged the limelight this week with the Dow Jones Industrial Average and S&P 500 hitting their highest levels since 2008. The tech-heavy NASDAQ sizzled, printing its highest level since 2000 during the week’s trading. The NASDAQ briefly flirted with the 3,000, unable to hold on to the psychological level. The DJIA similarly kissed the 13,000 mark, but ended the week a tinge lower, unable to hold on to the gains.

The possibility of a pull-back can’t be ruled out in the coming days with many analysts pointing towards a rally-fatigue. US non-farm payroll is due in the next week and another solid number will consolidate the gains.

Though oil finished the week lower, commodities got a raw deal this week with the CRB Index tumbling 1 percent on Friday itself. For the week however, the losses added up to a relatively modest 1.5 percent.

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03-02-2012

Ulli Newsletter Archives Contact

ETF/No Load Fund Tracker Newsletter For Friday, March 2, 2012

ETF/No Load Fund Tracker StatSheet

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

https://theetfbully.com/2012/03/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-03012012/

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Market Commentary

Friday, March 2, 2012

U.S. INDEXES SNAP WINNING STREAK; XLE SLUMPS AS OIL SINKS; GAZ BURNS BRIGHT

The Dow Jones Industrial Average (DJIA) snapped a three week winning streak as indexes closed lower on Friday.

Treasuries advanced for the first time in four days, as risk was off the table amid worries that measures to boost lending in the EU region and priming the region’s banks with excess liquidity will not spur growth.

The European Central Bank said overnight deposits touched record levels after the second round of LTRO on Wednesday, indicating banks are still worried about lending and prefer depositing the cash with ECB. The Fed purchased $1.97 billion in long-term securities Friday as part of Operation Twist.

There were also reports of the Federal Reserve and Wall Street banks locking horns over retaining rights on storage facilities for physical commodities such as warehouses, underground oil tanks etc. This is an important development that may result in the Fed either allowing banks more freedom in trading physical commodities, or force them to sell off storage assets altogether, dealing another blow after curbing trading with new rules.

US stocks ended marginally lower today. Energy firms led the slide among S&P 500 Index’s (SPX) 10 major sectors, as oil fell below $107 a barrel on EU growth worries. The week has witnessed multiple milestones and indices touched highs not seen since summer of 2008.

This is the Dow’s first weekly decline in three weeks.

The S&P 500 however, edged higher for the eighth time in the past nine weeks, although the index was down 0.3 percent to 1,369.63 on the day, after President Obama urged the Congress on Thursday to end $4 billion in subsidies to oil firms in an effort to check budget deficits.

The tech-laden NASDAQ Composite Index (COMP) lost 0.4 percent to end the week at 2,976.19. Both the S&P 500 and the NASDAQ finished the week higher for the fourth straight week despite today’s losses.

As worries over Europe persisted, the US 10-year yield fell 0.05 percentage point, or 5 basis points, to 1.98 percent. The Vanguard Total Bond Market ETF (BND) was up 0.20 percent over yesterday, while the iShares Barclays 20 Year Treasury Bond ETF (TLT) rose 0.93 percent for the day.

In the ETF space, the iPath Dow Jones UBS Natural Gas Subindex Total Return ETN (GAZ) made a spectacular comeback and added 6.4 percent on the day after getting hammered in the last couple of days. The gains on this ETN were, however, attributed to its massive premium.

The Guggenheim China Small Cap Index ETF (HAO) managed to move in the green territory after languishing for the last two days and added a modest 1.1 percent. This small-cap option is suited to investors looking to tap the burgeoning Chinese middle-class. I don’t track it yet in my weekly StatSheet yet, due to its fairly low volume.

Among the losers, the United States Gasoline Fund (UGA) tanked today and lost 2.2 percent after having gained over the past two days.

Energy producers were out of favor too, and the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) slid nearly 2 percent during the day’s trading.

Our Trend Tracking Indexes (TTIs) remained solidly in bullish territory with the Domestic TTI being on the plus side by +5.36% while the International TTI hovers at +5.32%.

With the markets having ascended literally in a straight line, this is not the time to be complacent. Changes in trend direction can occur quickly given the volatile investment climate we are living in. Even though I have not mentioned it in a week or so, you still need to be alert and have your exit strategy in place. Doing without can be hazardous to your financial health.

Have a great week.

Ulli…

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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 Doug:

Q: Ulli: In the Friday February 24 post you mention the “RSX” ETF was up 4.5 percent!  Since you issued an international buy signal, I have been nibbling at country funds and have search for a quote on “RSX” I find two, one is “index nasdaq:rsx @$159.20” and the second “nysearca:rsx @$33.37!” Which one are you following?

A: Doug: I am only aware of one RSX, and that is the second one you mentioned.

As an aside, remember country funds/ETFs run on their own cycle and are a ‘Buy’ whenever they cross their individual trend lines. They are NOT tied to the International TTI, which covers only “broadly diversified international funds/ETFs.”

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Back issues of the ETF/No Load Fund Tracker are available on the web at:

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ETF/No Load Fund Tracker Newsletter For Friday, March 2, 2012

Ulli ETF Tracker Contact

ETF/No Load Fund Tracker StatSheet

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

https://theetfbully.com/2012/03/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-03012012/

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Market Commentary

Friday, March 2, 2012

U.S. INDEXES SNAP WINNING STREAK; XLE SLUMPS AS OIL SINKS; GAZ BURNS BRIGHT

The Dow Jones Industrial Average (DJIA) snapped a three week winning streak as indexes closed lower on Friday.

Treasuries advanced for the first time in four days, as risk was off the table amid worries that measures to boost lending in the EU region and priming the region’s banks with excess liquidity will not spur growth.

The European Central Bank said overnight deposits touched record levels after the second round of LTRO on Wednesday, indicating banks are still worried about lending and prefer depositing the cash with ECB. The Fed purchased $1.97 billion in long-term securities Friday as part of Operation Twist.

There were also reports of the Federal Reserve and Wall Street banks locking horns over retaining rights on storage facilities for physical commodities such as warehouses, underground oil tanks etc. This is an important development that may result in the Fed either allowing banks more freedom in trading physical commodities, or force them to sell off storage assets altogether, dealing another blow after curbing trading with new rules.

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Weekly StatSheet For The ETF/No Load Fund Tracker Newsletter – Updated Through 03/01/2012

Ulli ETF StatSheet Contact

ETF/Mutual Fund Data updated through Thursday, March 1, 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 went into effect.

As of today, our Trend Tracking Index (TTI—green line in above chart) has broken above its long term trend line (red) by +5.58%. Be sure to tune into my blog for the latest updates.

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Major Market ETFs Open Month Higher

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

Stocks closed higher Thursday as investors weighed improved reading on the jobs front against slightly disappointing construction spending and manufacturing data. According to the Labor Department, the number of Americans filing first-time claims for unemployment benefits dropped 2,000 to 351,000 last week, the lowest since March 2008. Four-week average now stands lower by 5,500 at 354,000, statistics showed.

Separately, however, government report showed construction spending dropped 0.1 percent in January, the first monthly drop July. Another report showed incomes rose 0.3 percent while spending climbed 0.2 percent in January, both falling short of expectations.

The markets pared some of the early gains after U.S. manufacturing data came in weaker than expected. The Institute for Supply Management reading showed manufacturing activities slowing in Feb. The ISM manufacturing index fell 1.57 points to 52.4 in February though consensus estimates had put it at 54.7. Fortunately, any reading above 50 reflects overall expansion.

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U.S. Stock Indexes Slide, UUP Gains, GLD Loses Shine

Ulli Market Review Contact

[Chart courtesy of MarketWatch.com]

U.S. indexes reversed Tuesday’s gains after Fed Chairman Ben Bernanke hinted at stopping further liquidity expansion measures today. In other words, he took the punch bowl away for the time being by showing no monetary exuberance.

In a testimony before the Congress that started at 10 a.m. Wednesday, Bernanke said though continuing with liquidity enhancing measures is desirable, a faster-than-anticipated reduction in the jobless rate and higher energy costs may fuel inflation temporarily.  All the three indexes ended Feb. with a whimper while 10-year Treasury yields surged and prices of gold and silver sank.

The Dow Jones Industrial Average shed 0.4 percent, to close at 12,952.07. Despite today’s losses, the DJIA is up 2.5 percent in Feb. and 6 percent for the year. The S&P 500 declined 0.2 percent, to 1,368.83 with natural resource companies losing the most.

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