New ETFs On The Block: Guggenheim Dow Jones Industrial Average Dividend ETF (DJD)

InvestingAmid heightened market volatility and slumping Treasury yields, many investors have started to believe lower rates will linger for a bit longer, meaning dividend plays could make hay for an extended period while the Fed falters. Such a scenario may look ideal for a strategically timed new smart-beta product from Guggenheim Investments.   

The newly launched Guggenheim Dow Jones Industrial Average Dividend ETF (DJD) is weighted based on the dividend yields of the 30 stocks in the index. While the Dow Jones Industrial Average index remains one of the most popular indices in the world, it’s also one of the most maligned.

Created in 1896 by Charles Dow, the blue-chip benchmark follows a price weighting mechanism, which means the priciest stock in the index also gets the maximum weight. Not fundamentals. Not market capitalization. That also means price volatility of Goldman Sachs weighs more on the index despite the fact that Apple Inc, also a Dow component, has more than seven times the market capitalization of Goldman.

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ETF/No Load Fund Tracker Newsletter For February 5, 2016

ETF/No Load Fund Tracker StatSheet

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

http://www.theetfbully.com/2016/02/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-02042016/

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Market Commentary

INDEXES PLUNGE WITH NASDAQ CRASHING 3%

Fri pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

The major indexes headed south right out of starting blocks with the jobs report confirming the old mantra that good news is bad news, which caused concerns on Wall Street that the Fed could be increasing its interest rate hike cycle this year producing a bearish outcome for equities.

To be clear, the jobs report was OK on the surface but, as has been the case as of late, most newly created jobs came in the minimum wage and part-time arena, hardly the stuff that solid recoveries are made of. Still, unemployment dropped to 4.9% mainly due to the slumping labor participation rate.

The big loser of the day and the week was the Nasdaq, which surrendered over 5% during the last five trading sessions. Big names have been heading south all week, but the mother of all losses was taken today by LinkedIn (LNKD), which got slaughtered at the tune of -44%.

Needless to say, all of our 10 ETFs in the Spotlight slipped as well with Consumer Discretionaries (XLY) getting crushed the most by surrendering -3.23%. To no surprise, the conservative Consumer Staples ETF (XLP) held up very well and gave back on -0.16%.

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Weekly StatSheet For The ETF/No Load Fund Tracker Newsletter – Updated Through 02/04/2016

ETF/Mutual Fund Data updated through Thursday, February 4, 2016

TOC010716

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

 

1. DOMESTIC EQUITY MUTUAL FUNDS/ETFs: SELL — since 11/13/2015

TTI

Our main directional indicator, the Domestic Trend Tracking Index (TTI-green line in above chart) has recently crawled above its long term trend line (red) and finally generated a new “Buy” signal effective 11/3/15. The market subsequently dropped, and we exited again on 11/13/15. As of today, the TTI remains below its trend line by -2.36%, which means we are in cash on the sidelines.

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Aimless Meandering

Thur pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Volatility in oil and currency markets was on again as the S&P 500 dropped towards the 1,900 level, rebounded to make new highs for the day, went sideways but managed to close slightly in the green.

Crude oil was the predominant driver pushing the major indexes above and below their respective unchanged lines as the U.S dollar experienced its largest one-day drop vs. the Euro. U.S. service sector activity was very disappointing but with the mantra “bad news is good news” back in play, this was interpreted as the Fed possibly putting off future interest rate increases, a view that was echoed by Fed Gov Dudley.

5 of our 10 ETFs in the Spotlight closed up and 5 closed down. Heading the gainers were the Financials (IYF) with +0.75%, while on the losing side Consumer Staples (XLP) took the lead with -0.92%.

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Oil Prices Lift Off And Fuel Market Rebound

Wed pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

It was a wild session with the indexes meandering in the red most of the day when the tug-of war between oil and weaker than expected economic data came to an end with oil shooting straight up and gaining some 9% on the day.

Of course, as we’ve seen lately, there was no rhyme or reason behind oil’s sudden stratospheric move other the usual OPEC jawboning about emergency meetings to discuss potential production cuts. Fundamentally, oil looked horrible with soaring inventories, unchanged production and weakening demand.

Economic data in regards to the services economy and ADP reports were poor causing the initial drop in the markets. But none of it mattered as the bulls managed to avoid massive downside disaster—at least for today. It’s a good time to sit on the sidelines and watch this non-directional volatility show play itself out.

8 of our 10 ETFs in the Spotlight eked out a gain led by the Dividend ETF (DVY) with +1.31%. Consumer Discretionaries (XLY) were the loser of the day with -0.26%.

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Oil Prices Tumble And Markets Get Slammed

Tue pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

The lack of correlation between oil prices and the major indexes I pointed out yesterday reversed with a vengeance as oil dropped another 5.79% on top of yesterday’s loss of 6.78% causing the markets to head south all day with no recovery in sight.

Crude oil stumbling below $30/barrel accelerated a downdraft in energy and banking shares and even strong gains from Google’s parent Alphabet, Inc. were not able to stem the bearish tide.

The current market concerns range from the realization that Japan’s new NIRP (Negative Interest Rate) policy may very well spell the end of the stimulus cycle (QE) and not just economies around the world will have to learn to do without it but also equities, which have become addicted to a constant flow of Fed QE juice over the past 7 years.

It looks to me that the major stock indexes will have a hard time justifying current price levels without any further Fed assistance of easy money. In other words, the bear market appears to be just in its beginning stages.

Our 10 ETFs in the Spotlight headed south and closed unanimously in the red. Heading the group was the Financials (IYF) with -2.45%. Resisting the sell off fairly well was the Dividend ETF (DVY) with -0.90%.

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