ETF/No Load Fund Tracker Newsletter For Friday, January 27, 2012

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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/2012/01/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-01262012/

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Market Commentary

Friday, January 27, 2012

ETFs END THE WEEK ON AN UNCERTAIN NOTE

In what’s been a bit of an up and down week, the S&P 500 dropped 0.16% today. However, it’s been the 4th straight positive week for the index. With the spate of European downgrade news, European indices saw plenty of red.

Despite continued negativity in the Eurozone, the Euro once more appreciated against the dollar, hitting $1.32/Euro. Nevertheless, investors sought safety in low risk assets as the 10-year Treasury yield fell to 1.90%.

While it’s difficult to point to one indicator to gauge risk, seeing as the VIX has remained low but demand for Treasuries has been high, the outlook for Europe and the U.S. is pessimistic at the moment. To put it succinctly, we are in risk on mode for the long-term.

Today’s lackluster GDP numbers are proof that the U.S. is still a far way off from recovery. GDP growth was 2.8% in the 4th quarter, lower than expected. It is this anemic growth that supports the Fed’s decision to keep rates near zero through 2014, as credit markets have yet to serve as an effective channel to spur growth over the last few years.

Following in line with Standard and Poor’s, Fitch Ratings docked Spain and Italy down two notches. Although borrowing costs for Spain and Italy didn’t rise following the S&P downgrades, we’ll have to see if the investor outlook darkens now that two major ratings agencies have downgraded them.

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Weekly StatSheet For The ETF/No Load Fund Tracker Newsletter – Updated Through 01/26/2012

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ETF/Mutual Fund Data updated through Thursday, January 26, 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 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 +4.15%. Be sure to tune into my blog for the latest updates.

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European Concerns Return As Equity ETFs Fall

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Chart courtesy of MarketWatch.com]

Although today wasn’t a big mover or shaker, the S&P 500 fell 0.57%. However, some European indices such as the DAX and FTSE gained over 1%. Meanwhile, the Euro barely budged against the dollar, remaining at $1.31/Euro.

The 10-year Treasury took another dip today, falling to a yield of 1.93%. Investors just don’t seem to have much consistency in their risk outlook given jumps and drops in the Treasury rate.

The primary focus right now is whether a suitable deal can be hashed out between the Greek government and its bondholders. Not only must they see on the same wavelength, but other Eurozone leaders as well as the ECB and the IMF are having their say. Trying to determine an appropriate haircut as well as a coupon rate for new bonds that is agreeable with all parties involved is going to be a big mess.

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Sharp Upswing For Equity ETFs Despite Continued Negativity

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[Chart courtesy of MarketWatch.com]

Despite a down opening for markets, Apple’s massive earnings caused quite a roar. The S&P 500 jumped 0.87% while the NASDAQ had a big gain of 1.14% as Apple roared ahead due to stellar earnings. However, the same optimism wasn’t echoed by Europe and Asia.

Furthermore, the Euro rose to $1.31 against the dollar while the 10-year Treasury fell down to 2.01%. Also, gold crossed above the $1,700 mark.

The Fed’s announcement of prolonged low rates appeared to be the big boost for equity ETFs. The possibility of QE3 might serve to establish an equity rally along the lines of QE1 and QE2. Yet, I only see this decision as a confirmation that the U.S. economic outlook is far from rosy, which might bring the bear market back into play at some point.

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7 ETF Model Portfolios You Can Use – Updated through 1/24/2012

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The markets picked up a little upward momentum since last week’s issue with the S&P 500 gaining about 1.5%. The seven ETF Model Portfolios increased in value as well.

All eyes continue to focus on Greece and whether a suitable haircut with bond holders can be worked out. Looks to me that Greece is finally playing hardball as the possibility of a default looms large.

Closer to home, traders will be focusing on the Fed and its FOMC rate decision, which is to be released tomorrow. No changes are expected.

Take a look at the latest ETF Model Portfolio update:

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Still No Breakout or Breakdown for Major Market ETFs

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[Chart courtesy of MarketWatch.com]

Major market ETFs hovered near the zero mark once again as Greece remains in a deadlock with its creditors. The S&P 500 marginally dipped 0.10% while European indices were down as well.

Also, the Euro stood still at $1.30/Euro while the 10-year Treasury was virtually unchanged at 2.06%. Overall, the last couple weeks have presented an entry point to gain selective equity ETF exposure but markets haven’t moved significantly since.

While Eurozone risks still guide our low risk strategy, other investors seem to be regaining some of their appetite. The VIX has now broken under 20, showing that volatility has substantially subsided in the last month. Nevertheless, the grander picture of a strained global economy suggests market volatility can ramp back up.

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