Quantitative Easing (QE): Aka Saving The Stock Market From A Panic

Ulli Market Review Contact

Over the past few years, ever since the crash of 2008, I have mentioned repeatedly that we have not seen a ‘real’ economic recovery, only one based on a variety of stimulus efforts.

I finally found a chart in section 4 of a recent ZeroHedge article, supporting my viewpoint by outlining the entry and exit points of the QE attempts since early 2009. Take a look at the graph below:

[Click on chart to enlarge]

QE1 started in March of 2009 coinciding with the low in the stock market and lasted until around April of 2010. Notice the market drop after the QE1 exit. It may not look like much in this chart, but in May/June 2010, the S&P 500 dropped over 13% and was ‘saved’ with the subsequent start of QE2.

Once QE2 ended around May 2011, the markets dropped again and were not really resuscitated by the Fed’s ZIRP program (Zero Interest Rate Policy), but remained in a sideways pattern for the past 6 months or so.

Read More

12-16-2011

Ulli Newsletter Archives Contact

ETF/No Load Fund Tracker Newsletter For Friday, December 16, 2011

ETF/No Load Fund Tracker StatSheet

————————————————————-

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-12082011/

————————————————————

Market Commentary

Friday, December 16, 2011

MAJOR MARKET ETFS BARELY STAY AFLOAT AS ECONOMIC CURRENTS PUSH DOWN

In a near repeat of yesterday, major market ETFs inched forward a smidge with the S&P 500 gaining 0.32% but losing 2.8% for the week. Although there was a glimmer of hope stateside today, European markets were marginally in the red as the Eurozone is stuck under dark skies.

Yet, the telling indicator of market sentiment lies in bond markets, where investors are in “flight to safety” mode. The 10-year Treasury fell once again to a yield of 1.85%. Although the U.S. has its fair share of problems, I strongly believe that developed market and emerging market investors will view the U.S. as a safe haven to park their money during periods of instability.

Plus, the Treasury said that Europe remains a very serious risk to the U.S. economic climate, although this realization might be a little too late as the contagion has spread from peripheral Europe to the core of Europe. And at this point, no one is immune to Europe’s deterioration.

Adding more pain to the Eurozone, Moody’s cut Belgium’s credit rating down 2 levels. On one hand, it isn’t too surprising given the country’s debt-to-GDP ratio of roughly 97%. Not to mention, it had to spend over $5 billion to bail out Dexia Bank a couple months ago.

The worst part is that this might be the start of a slippery slope where France and others might get downgraded soon. Already, Fitch issued a negative outlook for France today while putting six other nations on credit watch. And with regards to banks, 7 major financial institutions had ratings downgrades from Fitch, including Goldman Sachs, Citigroup, and Bank of America.

On American soil, we’re still waiting a resolution on the budget deficit as the countdown to another possible government shutdown begins. Washington politics are simply appalling, and the detriment to markets is frightening.

Our Domestic TTI (Trend Tracking Index) is still above its trend line at +1.55%, while the International TTI is still in the negative at -9.47%. Essentially, we’re gaining very selective but limited sector/equity ETF exposure on the domestic side while steering clear of international ETFs. In other words, our buy/sell signals haven’t really changed in the past several weeks as Europe’s woes weigh heavily on our minds.

We had a pretty rough start to the week where the Euro slid considerably, and the initial hype of the revised EU treaty appears to be withering away. In a nutshell, the current atmosphere is still very risky. Thus, I strongly suggest erring on the side of conservatism with your portfolio by maintaining a big chunk in cash or bond ETFs.

Have a great week.

Ulli…

————————————————————-

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 Ian:

Q: Ulli: Appreciate all you do and value your information more than any of the dozens of sites I get info from. My bond mutual funds have dropped significantly since August. These include PTTDX, FKINX and TPINX. I am looking for alternative bond ETF/ETN funds.

My dividend stock ETFs have done well for last 3 years. They are DVY, PFF, XLP and XLU. I am holding the bond funds but in looking for alternatives in ETF/ETN area; I have found nothing that compares to the dividend stock ETFs.

Am I wasting my time looking for other ETF/ETN bond type funds or just focus on the things I have that are working?

A: Ian: You have the right idea, just be sure to use my recommended trailing sell stop discipline should any of your positions go against you by too large a margin.

The markets have been on a roller coaster ride throughout 2011, as I detailed in today’s (12/10/11) post, which has made it very difficult to hold on to any positions for a longer period of time. With Europe being in upheaval, I expect that volatility to continue until their structural issues have been resolved—whenever that may be.

———————————————————-

WOULD YOU LIKE TO HAVE YOUR INVESTMENTS PROFESSIONALLY MANAGED?

Do you have the time to follow our investment plans yourself? If you are a busy professional who would like to have his portfolio managed using our methodology, please contact me directly or get more details at:

https://theetfbully.com/personal-investment-management/

———————————————————

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

https://theetfbully.com/newsletter-archives/

ETF/No Load Fund Tracker Newsletter For Friday, December 16, 2011

Ulli ETF Tracker Contact

ETF/No Load Fund Tracker StatSheet

————————————————————-

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-12082011/

————————————————————

Market Commentary

Friday, December 16, 2011

MAJOR MARKET ETFS BARELY STAY AFLOAT AS ECONOMIC CURRENTS PUSH DOWN

In a near repeat of yesterday, major market ETFs inched forward a smidge with the S&P 500 gaining 0.32% but losing 2.8% for the week. Although there was a glimmer of hope stateside today, European markets were marginally in the red as the Eurozone is stuck under dark skies.

Yet, the telling indicator of market sentiment lies in bond markets, where investors are in “flight to safety” mode. The 10-year Treasury fell once again to a yield of 1.85%. Although the U.S. has its fair share of problems, I strongly believe that developed market and emerging market investors will view the U.S. as a safe haven to park their money during periods of instability.

Plus, the Treasury said that Europe remains a very serious risk to the U.S. economic climate, although this realization might be a little too late as the contagion has spread from peripheral Europe to the core of Europe. And at this point, no one is immune to Europe’s deterioration.

Read More

Weekly StatSheet For The ETF/No Load Fund Tracker Newsletter – Updated Through 12/15/2011

Ulli ETF StatSheet Contact

ETF/Mutual Fund Data updated through Thursday, December 15, 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 +1.33%. Be sure to tune into my blog for the latest updates.

Read More

Funky Day On The Street As ETFs Zigzag

Ulli Market Review Contact

[Chart courtesy of MarketWatch.com]

Markets were in a state of flux today as the S&P 500 bumped up only 0.32%. Nevertheless, the Euro remained at $1.30/Euro while commodities didn’t fluctuate tremendously. Pretty much, the outlook hasn’t brightened any more today.

However, on the Asian front, markets took somewhat of a dive as the Shanghai Composite and Nikkei dropped 2.14% and 1.67%, respectively.

IMF chief Christine Lagarde highlighted the severity of the Eurozone crisis by advocating a coordinated effort to stem the contagion. She went so far as to imply that we can see a worldwide economic collapse akin to the Great Depression. The risk certainly hasn’t dissipated.

Read More

Major Markets ETFs Slide Once Again

Ulli Market Review Contact

[Chart courtesy of MarketWatch.com]

Major market ETFs continued to see red again as the situation in Europe worsens. Markets worldwide felt the brunt of the Eurozone’s woes as the S&P 500 fell 1.14% while some European indices hurt even more. In line with this, the Euro prolonged its slide against the dollar, now reaching $1.30/Euro.

There was some serious action in commodities as well. Gold dropped a massive 5.12% to hit $1,575 while oil took a steep drop down to $95. Also, 10-year Treasury yields dropped to a yield of 1.90% as investors flock to seemingly safer U.S. government fixed income securities.

Bernanke announced today that there are no plans for the Fed to offer direct aid to Europe. However, a major turn for the worse could change that seeing that the recent central bank intervention wasn’t initially planned. Europe is simply too volatile to have any concrete idea of what may come next.

Read More