[Chart courtesy of MarketWatch.com]

1. Moving The Markets

Stocks ended slightly higher on Monday as investors awaited more clues from the Federal Reserve on whether the central bank will soon begin to wind down its economic stimulus. Perhaps the largest bit of news today was in the food industry where Sysco Corp announced it will buy US Foods Inc for about $3.5 billion from its private equity owners. This deal will combine the top two U.S. food distributors and create a company commanding at least a quarter of the $235 billion North American market.

The Nikkei is up nearly 51 pct year-to-date and is thus headed for its best yearly gain since 1972.  The decrease in the Yen largely spurred the Nikkei’s climb today. Declines in the yen tend to boost sentiment towards Japanese equities because investors expect the weaker currency will inflate overseas earnings for exporters.

Markets looked better in Europe today as European shares edged up from the previous session with Chinese export data encouraging investors to anticipate stronger global growth. China’s exports handily beat forecasts in November and an unexpected drop in consumer inflation eased fears of any imminent policy tightening, helping to sustain a rally in global shares which had been fuelled by estimate-beating jobs data from the United States on Friday.

In ETFs, the top moving funds were the (AGA) PowerShares DB Agriculture Double Short, the (UGAZ) VelocityShares 3x Long Natural Gas ETN and (once again) the (NUGT) Direxion Daily Gold Miners Bull 3X Shares.

Our ETFs in the Spotlight edged up as well with two of them making new highs for the year:

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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 334 (last week 332) 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 93 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 67) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 774 (last week 791) above the line and 76 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.

Friday was a fascinating day, because this was the day when the markets made up their mind that growth is good, said Jeff Korzenik, chief investment strategist at Fifth Third. But what is particularly interesting is that the markets are not afraid of the taper, as exemplified in the bond market today. This has a lot of implication for sector selection and where rates can go, which is the right call, Jeff noted.

Normally Treasury yields would not go higher if tapering is happening, irrespective of whether it is good or bad. Asked to comment on it, Jeff said tapering had relatively little impact on the bond market.

Clearly quantitative easing/asset purchases have continued even as Treasury net issuances have declined and that signifies supply and demand is not the dominating effect anymore. After decades in the bond market, supply and demand seem to be a tertiary factor. What’s really important is nominal GDP and the markets are trading-off of a 4-year average; bonds are going higher because there’s a growth in nominal GDP again. That being said, there’s unlikely to be runaway yields in the near term given the level of inflation so far, and the markets have finally figured that out, he observed.

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Global X Funds, the New York-based issuer known for its focus on emerging markets and niche strategies, has introduced the first ever Portugal specific equity ETF listed in the US.

Some analysts believe the so-called PIIGS countries (Portugal, Ireland, Italy, Greece and Spain) in the 17 member currency zone have turned a corner and Portugal is at a point of inflection where Lisbon will be able to generate positive GDP growth in 2014, making valuations relatively cheap for this small European nation.

Also ETFs focused on the other members of the group, notably the iShares MSCI Spain Capped ETF (EWP), the iShares Italy Capped ETF (EWI) and the Global X FTSE Greece 20 ETF (GREK) have managed to outperform the markets with GREK rising more than 40 percent over the past twelve months.

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ETF/No Load Fund Tracker StatSheet

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

http://www.theetfbully.com/2013/12/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-12052013/

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Market Commentary

Friday, December 6, 2013

MARKETS BACK ON TOP AFTER A SHAKY WEEK

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

It was just one day, yet there was ample meaning wrapped up in the connection that the 10-yr Treasury note (+3/32, 2.87%) and the stock market both pushed higher. Gold prices and the US Dollar Index, meanwhile, were little changed. This is a positive end to a somewhat sour week that saw the S&P and Dow both swim in the red daily.

The headlines for the employment data this week were reassuring on just about every front. Nonfarm payrolls increased by 203,000 (Briefing.com consensus 188,000) and were revised up for September (to 175,000 from 163,000) and down slightly for October (to 200,000 from 204,000). Nonfarm private payrolls increased by 196,000 (Briefing.com consensus 200,000). The unemployment rate fell to 7.0% from 7.3%

Bitcoin’s value took a tumble this week after the People’s Bank of China issued an official statement about its stance on the digital coin, knocking the cryptocurrency’s value down into the $800s after lofty $1,200 highs. China has been largely responsible for Bitcoin’s dramatic 500% rise in value over the last month, with yuan dominating the trading markets, according to the Genesis Block. China’s government evidently felt that the cryptocoin was getting too hot to ignore.

Our ETFs in the spotlight headed back up to close near their yearly highs:

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ETF/Mutual Fund Data updated through Thursday, December 5, 2013

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

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 Trend Tracking Index (TTI—green line in above chart) has bounced off its long term trend line (red) by +4.01% after briefly dipping below it late in June 2013.

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 line to the downside. Be sure to tune in for the latest updates.

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