Equities Continue To Trend Lower On Interest Rate Hike Speculation

Mon pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Stocks ended mostly lower today, continuing on the down-slide from a sub-par performance last week. The S&P 500 dropped a slight 0.08%, the Dow gained 0.26% and the Nasdaq lost 1.06% on the day.

The focus on interest rates remain front and center this week as markets anxiously await the outcome of the Federal Reserve’s two-day meeting that starts tomorrow. Results of the meeting should provide some solid indication as to whether a recovering economy will lead to interest rate hikes.

Other big news in focus this week will be Scotland’s vote on independence, which will take place on Thursday; as well as how the Alibaba IPO is going to play out. If you didn’t know, Alibaba plans to increase the size of its U.S. IPO because of “overwhelming” investor demand. Alibaba could set a new record for the world’s biggest IPO if underwriters exercise an option to sell additional shares to meet demand, pushing it as high as $24.3 billion and overtaking Agricultural Bank of China Ltd’s $22.1 billion listing in 2010.

Overseas, Russian stocks and the ruble fell with the currency dropping to a record as the U.S. and European Union toughened sanctions against the country last week

3 of our 10 ETFs in the Spotlight advanced, while 1 remained unchanged and 6 of them closed lower.


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ETFs/Mutual Funds On The Cutline – Updated Through 09/12/2014

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 318 (last week 349) 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 97 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. 67 ETFs (last week 76) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 747 (last week 796) above the line and 103 below it out of the 850 that I follow.

Take a look:

1. ETF Master Cutline Report     

2. ETF High Volume Cutline Report

3. MF Cutline Report

In case you are not familiar with some of the terminology used in the reports, please read the Glossary of Terms.

If you missed the original post about the Cutline approach, you can read it here.

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One Man’s Opinion: Will US Economic Growth Exceed 2 Percent This Year?

92835431US bonds and stocks have been moving in tandem for some time now, indicating the new reality in price correlation, said Jim Bianco, President and Founder of Bianco Research.

Historically, bond and stock correlations have never been stable over a period of decades; they go back and forth depending upon whether markets are worried about inflation or deflation. In the US, there are concerns over growing inflation, but surprisingly any uptick in price levels are missing.

So, yields have been down for most of the year and stocks have been up. Stated another way, stock and bond prices have been going up. If inflation had been the real threat, stock and bond prices would have been going down. Investors can not hide anywhere in the financial assets sectors when inflation goes up, though it’s possible to hide in the commodities markets.


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New ETFs On The Block: First Trust Strategic Income ETF (FDIV)

105487691First Trust portfolios, the Il-based sixth-largest issuer of exchange-traded funds, launched a new actively-managed product that aims to generate risk-adjusted returns through positions in various asset classes.

The newly launched First Trust Strategic Income ETF (FDIV) is sub-advised by six portfolio managers including Stonebridge, Richard Bernstein, Energy Income Partners and First Trust Global Portfolios.

FDIV is a “multi-strategy” fund that holds securities across six-asset classes; high-yield bonds and senior loans, master limited partnerships (MLPs) and energy infrastructure stocks, preferred securities, dividend stocks, mortgage-related securities and international sovereign bonds.


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ETF/No Load Fund Tracker Newsletter For September 12, 2014

ETF/No Load Fund Tracker StatSheet





Market Commentary

Friday, September 12, 2014


Fri pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Equities finished lower on the week, led by a decline in energy stocks. The Dow fell 0.9% to end the week at 16,988, the S&P 500 dropped 1.1%, to end at 1,986 while the Nasdaq pulled back 0.33%

It was an extremely slow week for economic data, but readings on the economy were encouraging nonetheless. Retail sales showed the consumer strengthened in August, mostly driven mostly by auto sales which rose 0.6%

All eyes will be on the Federal Reserve next Wednesday, when it will release its interest rate decision as well as its quarterly outlook. Expectations are for the Fed to reduce bond purchases by another $10 billion per month, taking current purchases down to $15 billion per month.

All of our 10 ETFs in the Spotlight slipped today but remain on the bullish side of their respective trend lines, as the table below shows.


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Weekly StatSheet For The ETF/No Load Fund Tracker Newsletter – Updated Through 09/11/2014

ETF/Mutual Fund Data updated through Thursday, September 11, 2014

Table of Content082312

If you are not familiar with some of the terminology used, please see the Glossary of Terms.




Our main directional indicator, the Domestic Trend Tracking Index (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 TTI (green line in above chart) is positioned above its long term trend line (red) by +2.65%.

To avoid a potential whip-saw, a Sell signal to move out of all domestic equity positions will be generated once we have clearly pierced the red line to the downside. Be sure to tune in for the latest updates.


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