Equities Continue Trending Upward On Positive U.S. And China News

Wed pic

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

U.S. markets are up for a third day in a row. Investors drove stock prices to their highest level in a week today, encouraged by a crop of corporate earnings and reassuring U.S. and Chinese economic data.

Yahoo (YHOO) presented the public with a positive earnings report late Tuesday that ignited big trading volumes and resulted in large gains for the stock today. The company reported that it is making most of its money from its stakes in two Asian Internet companies: China’s Alibaba Group and Yahoo Japan, which both had surges in revenue growth for Q4 2013.

Equities also responded well today to various other reports on the state of the U.S. and China economies. We received information today from China that said their economy grew 7.4% from Q1 2013 and a report that U.S. factory production was up for Q1 2014.  Both numbers beat analyst expectations and are positive signs of continued domestic and global economic growth.

Our 10 ETFs in the Spotlight headed higher with one of them still remaining below its long term trend line; however, 3 made new highs and 9 are now in the green YTD.

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Markets Continue Their Rollercoaster Ride; China’s Gold Appetite

Tue pic

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

The S&P 500 rose today, along with all ten industry sectors. While the markets have rebounded well over the past two days, all three major indexes remain down for the month and the year. We saw positive earnings reports from both Coca-cola (KO) and Johnson & Johnson (JNJ) today as traders remain focused on what the latest wave of quarterly earnings will say about the health of the U.S. economy and companies. Several other major companies, including Google (GOOG), American Express (AMEX), Bank of America (BAC) and IBM (IBM) are due to report results on Wednesday.

TripAdvisor (TRIP) led all the risers in the S&P 500 index, gaining 4.4% to reach $83.30, while PetSmart (PETM) posted the steepest drop among companies in the S&P 500 index after an analyst downgraded the stock, saying new competition in pet care will create trouble for the retailer. The stock fell 4% to $66.61.

Gold broke below the key 200-day moving average today, which caused the commodity to tumble a total of about 2%. We also saw silver and platinum continue to be sold off after Monday’s rally across the board. Chinese firms were making “golden” news today as we heard they may have locked up as much as 1,000 tonnes of gold in financing deals. Analysts speculate that the financing-related buying in the world’s top gold consumer means prices could come under pressure if imports are hit by a broader crackdown on using commodities for finance.

Our 10 ETFs in the Spotlight improved with one of them still remaining below its long term trend line; 8 of them are now in the green YTD.

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Markets Regain Footing On Positive U.S. Retail Sales Data

Mon pic

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

Markets here in the U.S. rallied today after as investors gained confidence from the strong report on March retail sales we received. U.S. retail sales recorded their largest increase in 1.5 years in March, a bigger gain than had been anticipated and the latest sign that the economy is doing well. The S&P 500 gained 0.84%, as the chart above shows, but it was a sloppy day, which remained in roller coaster mode until the close.

Citigroup (C), up 4.4% today, led financial shares higher after the bank reported quarterly earnings that beat expectations, aided by a smaller loss on its troubled assets even as its revenue declined. Bank of America (BAC) gained 1.5% and Morgan Stanley (MS) gained 2.1%.

In other corporate news, Google (GOOG) has acquired New Mexico-based drone maker Titan Aerospace. Titan specializes in building drones capable of staying in the sky for years on end. Google gained 0.36% for the day.

On a positive international note, the World Trade Organization has raised its forecast for growth in global trade this year to 4.7%, but warned that risks such as the slowdown in developing economies and increasing geopolitical tensions, including in Ukraine, could potentially undermine its recovery. Talk about a useless forecast! That’s like saying that the sun will shine tomorrow, unless it’s clowdy and rainy.

Our 10 ETFs in the Spotlight recovered with one of them still remaining below its long term trend line; but 6 of them are positive YTD.

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ETFs/Mutual Funds On The Cutline – Updated Through 04/11/2014

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 344 (last week 367) 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. 76 ETFs (last week 81) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 489 (last week 695) above the line and 360 below it out of the 859 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: The US Fed Is Focused On Wage Inflation; But Will They Remain Accommodative?

92835431The recent market rally that took place, after the minutes from the Fed’s last FOMC meeting were published, was kind of a relief rally because most participants had expected the hawks to get their message out, like it happened on earlier occasions, said Scott Mather, deputy chief investment officer at Pacific Investment Management Co.

What the markets saw instead was a more dovish tone from the FOMC members. The FOMC was so worried about the market’s possible interpretation of their stand and moves about the so-called “quantitative forward guidance” or “fuzzy/qualitative guidance” that they held a special pre-meeting ahead of the normal meeting so that they could talk about how they can make a nuanced change about this new world of fuzzy guidance, he added.

Asked if the Fed’s observation “rate-hike expectations were overstated” means re-calibration of timing in fixed-income investments, Scott said PIMCO believed the Fed is likely to wait longer before it starts to make moves on rates and once they do, they will go very slow. That’ what the leadership and the Fed has said for quite some time while the markets, at times, chose not to believe that.

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New ETFs On The Block: Proshares DJ Brookefield Global Infrastructure ETF (TOLZ)

91551519ProShares, the Bethesda, MD based issuer known for its inverse and other alternate range of exchange traded funds, expanded its lineup of traditional ETFs with the launch of the ProShares DJ Brookfield Global Infrastructure ETF (TOLZ).

The new fund offers exposure in the global infrastructure equity space, which is expected to witness trillions of dollars in investments by governments across the world in an effort to reignite growth post recession.

According to infrastructurereportcard.org, America alone would require $3.6 trillion in infrastructure investments. Emerging markets, including Brazil and India, are expected to spend trillions of dollars before the end of this decade.

TOLZ tracks the Dow Jones Brookfield Global Infrastructure Composite Index, a market capitalization weighted gauge comprised of global companies that can be viewed as pure infrastructure firms. Nine groups from developed and emerging markets, including master limited partnerships, within the infrastructure industry are targeted by the fund. The index comprised of 121 companies as of 31 December, 2013 with a weighted average market cap of $20 billion.

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