Equities Stay Above Water Amidst Mixed Messages From Fed

Wed pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Stocks rallied late in the day, which pushed the S&P 500 to close a third straight day in positive territory and finish just short of its all-time high. The S&P 500 gained 0.3%, the Dow rose 0.4%, however, the Nasdaq fell from grace to close down 0.03%.

A large portion of headlines today focused on the Fed minutes and the back and forth speculation as to when the Fed will raise short-term interest rates. The general sentiment amongst economists is that rate increases are expected to begin some time in 2015. As we all know, the historically low interest rates have been a key driver for the five-year bull market we are in.

In earnings news, Lowe’s (LOW) reported a notable increase in Q2 profits that topped analyst estimates. However, the company also informed us that they lowered their 2014 earnings estimates moving forward. Shares dilly dallied back and forth, but ultimately gained 1.7% on the day.

PetSmart (PETM) rose 1% today, to $70.52 after the company said it was exploring a sale of the business. The pet supply retailer has recently been under pressure from activist investors to consider a deal or a major restructuring. I guess they are starting to listen.

7 of our 10 ETFs in the Spotlight closed up, while 3 of them made new yearly highs as the YTD table below shows.

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Markets Continue To Rally On Housing Data And Apple’s $100 Mark

Tue pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Domestic markets continued to rally today on dissipating geopolitical fears, strong earnings and upbeat housing data. The S&P 500, Dow and Nasdaq all gained as the chart shows.

On the economic front, housing starts surged 15.7% in July and inflation remained minimal. Housing related stocks capitalized on the strong data, and companies such as KB Home, DR Horton and Pulte Group all gained at least 1.5% on the day. What stood out most perhaps was that Home Depot (HD) shares jumped 6% after the update of housing data, as well as their released earnings report which topped analyst expectations.

In tech news, Apple (AAPL) was one of the most heavily traded stocks of the day after the stock reached $100 share for the first time since the 7-for-1 split back in June. Traders also seem to remain bullish on the upcoming release of the iPhone 6.

With tensions between the Ukraine and Russia easing, as well as decreased levels of violence in the Israel conflict, investors remain poised to capitalize on continued economic growth here in the U.S. and appear to be focusing on M&A activity.

Again, all of our 10 ETFs in the Spotlight joined in the continued uptrend, with two of them making new highs for the year as you can see below.

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Tensions Ease Abroad; Airline Stocks “Take Off”

Mon pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Markets were back in full swing, as the Dow surged 175 points and the Nasdaq hit a 14-year high. The S&P 500 gained 0.9%, the Dow climbed 1.1% and the Nasdaq gained 1%, which marked a fourth straight session of gains.

The buzz around the networks attributed bullish sentiment today on the easing of geopolitical fears abroad, the lack of anticipated surprises from Yellen, and M&A fever.

Talks over the weekend involving Germany, France, the Ukraine and Russia raised hopes of an eventual cease-fire deal, which provided a sigh of relief to investors. Secondly, Wall Street expects that Yellen will opt to keep rates lower for the months to come. Finally, M&A activity is heating up. The big M&A news today was Dollar General (DG) announcing early this morning that they topped Dollar Tree’s (DLTR) bid to acquire Family Dollar (FDO) for $78.50 a share, all in cash!

Airlines were back in the news today, banking off the falling crude oil prices we saw. Crude oil dropped by $1, which stimulated sharp gains in several airlines, including United Continental Holdings (UAL), up 4%, American (AAL) up 3.7%, Southwest (LUV), up 3.5%, Delta (DAL), up 2.5% and JetBlue (JBLU), which gained 3%.

All of our 10 ETFs in the Spotlight showed gains, with one of them making a new high for the year.

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ETFs/Mutual Funds On The Cutline – Updated Through 08/15/2014

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 325 (last week 297) 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. 71 ETFs (last week 70) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 708 (last week 630) above the line and 142 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: Are Emerging Markets In Europe And Asia Looking Attractive?

92835431Investors need to look at the balance between the current uncertainty and the opportunity amidst heightened geopolitical risks, said Brain Jacobsen, Chief Portfolio Strategist at the Wells Fargo Advantage Funds. It’s all about knowing the risks that are out there and whether investors are being compensated for them.

A lot of current risks are being driven by the situation between Russia and Ukraine and the dangers in the financial markets are mainly driven by geopolitics. The Federal Reserve hiking rates sooner than anticipated is not a big issue and really is a “tempest in a teapot.”

Investors should just ride-out short-term volatility and look to buy on the dips, he added. Asked why he thinks the votes of 2015 will be important and not Mr. Plosser or Mr. Fischer, who, perhaps speak more than other members, Brian said among the current voting members of the Federal Open Market Committee, there are two hawks who are squawking quite a bit.

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New ETFs On The Block: Market Vectors China-AMC SME-Chinext ETF (CNXT)

95519646Market Vectors, the NY-based exchange-traded fund issuing arm of Van Eck Global, added another China-focused fund to its kitty with the launch of the Market Vectors China-AMC SME-ChiNext ETF (CNXT).

The new fund aims to give direct exposure in China A-shares through the sub-advisor’s RQFII (Renminbi Qualified Foreign Institutional Investor) quota. A-shares are companies incorporated in China and trade on the Shanghai and Shenzhen Stock Exchanges. They are quoted in renminbi (yuan) and are only available to domestic investors, Qualified Foreign Institutional Investors (QFII) and RQFII.

The latest credit report from China shows the country has managed to contain the much-talked about crisis in the real-estate sector. Additionally, the manufacturing sector showed evidence of a strong recovery while outbound shipments from the country soared. The efforts of the government to stimulate the economy are slowly starting to bear fruit. Hence, Market Vectors new product comes at an opportune time.

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