Positive Start To May After Hectic April

Mon pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Today marks the first trading day of May, and ushers in what has historically been the worst six-month stretch for stocks. And while there’s no denying that history shows the May-through-September period delivers far lower stock returns than the more bullish October-through-April time frame, implementing this rather extreme market-timing approach to investing might be a bit of overkill. After all, we prefer letting our Trend Tracking Indexes (TTIs) and trailing sell stops be our guide to market exposure.

The S&P 500 remains above 2,000 and the DOW keeps flirting with 18,000. U.S. Crude also has maintained a steady climb to $45.00 a barrel but got pulled off its lofty levels today.

To kick off the month in economic news, a gauge of U.S. factory activity fell in April as U.S. macro data continue to slump and China data weakens.

In earnings news, Cisco (CSCO) reported better-than-expected Q3 results as volume rose and the firm’s cost-cutting measures took hold.

With earnings season pretty much over, investors are keeping their eyes on the upcoming summer months to see how currency issues and oil prices (which are on the rise) will impact markets.

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ETFs/Mutual Funds On The Cutline – Updated Through 04/29/2016

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 381 ETFs, of which currently 300 (last week 330) 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. Volume figures can change in a hurry, so be sure to check first before investing.

These ETFs are generated from my selected list of 98 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. 81 ETFs (last week 83) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 367 (last week 433) above the line and 413 below it out of the 780 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 The Federal Reserve Finally Hike Rates In December?

ManMorgan Stanley is predicting 3-4 percent earnings growth in 2016 and in 2017, said Adam Parker, chief US equity strategist and director of quantitative research at Morgan Stanley.

If investors go out a year from now and pay 16 times for the earnings month 13 to 24, roughly the S&P should be at 2050. The S&P is currently trading 2-3 percent above 16 times earnings, maybe somewhat more optimistic earnings 13-24 months from now.

Morgan Stanley believes the market has come a long way in the rally and the view was more optimistic when the markets were lower in January-February; obviously the risk-reward scenario is getting more balanced now. Investors need to focus on two points macro-wise: One – will the Chinese economy continue to look like it is recovering or will it slow; Morgan Stanley’s answer is it would slow.

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New ETFs On The Block: Victory CEMP Emerging Market Volatility Wtd Index ETF (CEZ)

95551488After enduring turmoil in China and growth worries in Europe, emerging markets managed to get on its feet lately, as evidenced by the performance of different EM indices. That didn’t go unnoticed by Ohio-based Victory Capital, which recently launched a strategic beta fund focused on emerging markets.

The Victory CEMP Emerging Market Volatility Weighted Index ETF (CEZ) is the firm’s 11th launch and the first since Victory Capital acquired Compass EMP less than a year ago.

The new fund will track the performance of the CEMP Emerging Market 500 Volatility Index – an index developed in-house, and can be considered by investors looking for exposure in emerging markets through a low-risk alternative in order to diversify their portfolios.

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ETF/No Load Fund Tracker Newsletter For April 29, 2016

ETF/No Load Fund Tracker StatSheet

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http://www.theetfbully.com/2016/04/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-04282016/

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Market Commentary

RUNNING OUT OF STEAM

Fri pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Coming off one of the worst day for stocks since early February, domestic shares were under pressure again today. Investors have been reacting to mixed earnings reports and maybe, just maybe, the realization is sinking in that the economy is simply underperforming.

Despite the sloppy finish to the week, the Dow and S&P 500 ended April with tiny gains, with the Dow up 0.5% for the month and the S&P 0.3%. The Nasdaq did not fare nearly as well, falling 1.9% in April.

Wall Street, of course, is coping with the worst stretch for corporate profits since 2008, with earnings on track for a third straight quarter of negative growth. While there have been big beats, such as Facebook (FB) and Amazon.com (AMZN), there also have been a number of disappointments by major players ranging from Apple (AAPL) to Google parent Alphabet (GOOG).

In earnings reports Friday, oil giant Exxon Mobil (XOM) said profit fell 63% but still topped very low earnings expectations, posting earnings per share of 43 cents, topping the 31 cents forecast. Exxon Mobil, which has been savaged by the drop in oil prices to 13-year lows back in mid-February, posted revenues of $48.71 billion, which also topped estimates. Chevron, however, fell short of profit expectations but beat revenue expectations.

Investors are still digesting recent decisions by the U.S. Federal Reserve to hold off on interest rate hikes, and a surprise decision yesterday by the Bank of Japan not to inject more stimulus into its ailing economy.

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Weekly StatSheet For The ETF/No Load Fund Tracker Newsletter – Updated Through 04/28/2016

ETF/Mutual Fund Data updated through Thursday, April 28, 2016

TOC042816

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 4/4/2016

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) by +1.42% generating a new Domestic Buy signal effective 4/4/2016 as posted on the blog.

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