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

Ulli Model ETF Portfolios Contact

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

Ulli Market Review Contact

[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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Major Market ETF Declines Show That Pessimism Isn’t Fading Away Soon

Ulli Market Review Contact

[Chart courtesy of MarketWatch.com]

The week started off on a bad note, as major market ETFs swung to the downside. The S&P 500 dropped 1.17% while other U.S. indices performed similarly. The dollar stayed at $1.30/Euro while commodities didn’t move much.

Keeping in line with the uncertainty in Europe, investors continued to flock toward Treasuries, with the 10-year Treasury falling to a yield of 1.81%, the lowest since early October. Although the VIX index may not show how risky the market is, the shift toward fixed income highlights the greater possibility of a long-term downside scenario with equities.

As I talked about in my weekend article about quantitative easing, the implementation of QE3 could push equity ETFs into bull territory given the gains seen during QE1 and QE2. Whether QE3 could offset Europe’s problems is up in the air though.

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ETFs/Mutual Funds On The Cutline – Updated Through 12/16/2011

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 48 (last week 101) 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. Only 8 ETFs (last week 16) have managed to hang on in bullish territory after the recent volatility.

The third report covers Mutual Funds on the Cutline. There are currently 37 (last week 154) above the line and 824 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 12/18/2011

Ulli ETF News 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 12/18/2011.

Last week’s relief from the EU summit proved to be short lived and turned into disappointment, as it became clear that Europe’s leaders managed to come in below the already low expectations. In other words, they underwhelmed, again, and the S&P 500 dropped -2.8% as a result.

Now, infighting between the French and the British has turned this serious debt problem into a 3-ring circus. In my view, there simply is no good solution, only varying degrees of misery and pain, as severe austerity measures will eventually be met by increasing social unrest.

This week, we covered the following:

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Not Much Progress In The Wake of the EU Summit

Ulli Market Review Contact

It was another rough week for global markets as the Eurozone remains stuck in a dire situation. Meanwhile, China’s economy is starting to show more weakness while the U.S. situation hasn’t really improved. The flood to Treasuries this week provides an indication that investors are unsettled by the level of market risk on a global scale, especially Europe.

A litany of ratings downgrades were handed out to both countries and banks, while more countries were put on negative outlooks. For instance, France might be set for a downgrade in the very near future, which could seriously rattle markets.

In the political arena, there is significant discord over the EU Treaty with countries unable to agree on various measures such as budget deficit provisions. And to make the situation worse, the IMF suggested that a Great Depression scenario is possible given the amount of financial harm the contagion has done.

Check out the interview below to get a comprehensive overview of recent Eurozone developments and where markets might be headed amidst continuing turmoil.

http://www.youtube.com/watch?v=lUjvyaxHpvY