No Market Turn-Around For The Month Of September; International TTI In Bear Market Territory

Tue pic

[Chart courtesy of]

1. Moving the Markets

Well, we can check this month off as the worst for the markets since January.

The S&P 500 finished the month down just over 1.5%, the Nasdaq dropped 1.9% and the Dow ended down 0.3%.

It seems that throughout the month stocks have been hurt by conflict abroad, in places like Ukraine, Iraq and Syria. Additionally, recent pro-democracy protests in Hong Kong have added to geopolitical risk. Investors have also had to come to grips with the fact that the Fed will soon have to start raising interest rates.

If you owned shares of health care ETFs in the third quarter though, you fared pretty well given the fact that the largest gains have come in the healthcare sector. Across the market, healthcare stocks are up 6% for the quarter.

Lastly, let’s talk about gas. With crude oil prices plunging to near two-year lows and likely to remain tepid through year’s end, consumers in all but a handful of states could soon pay $3 a gallon or less for gasoline, the lowest pump prices since 2010. Rising global oil production, ample inventories, slackening demand and a strong U.S. dollar have all put pressure on the global oil markets recently. Today, Brent crude fell 2.4% to $94.83.

9 of our 10 ETFs in the Spotlight slipped as the markets meandered with a downside bias.


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Markets Pull Back; Rattled By Hong Kong Protests

Mon pic

[Chart courtesy of]

1. Moving the Markets

Pro-democracy protests in Hong Kong shook the markets today. As if investors didn’t have enough global conflicts on their plate already. The Hong Kong protest is the latest geopolitical stir to snag Wall Street’s attention, and cause investors to pare back their risk-taking. Last week, U.S. markets went on a volatile ride primarily driven by global uncertainty in Iraq, Syria and the Ukraine. For the day, the three major indexes dropped.

Today was not a good day for Ford (F) either. Share prices fell dramatically (7.47%) after the company warned that losses in Russia will delay a return to profitability in Europe and that this year’s big losses in South America will continue. Adding fuel to the fire was their additional announcement that last Friday’s recall of 850,000 vehicles for a short-circuiting problem with an air bag control module will cost about $500 million to fix. Ouch!

The news wasn’t all bad today though. One of the largest gainers was Iron Mountain Inc (IRM), whose shares gained 5.71%. The data management company announced today that it plans to acquire Recall Holdings Ltd (RCLHF) for more than $2 billion. Recall is a provider of information management solutions and trades on the ASX, but conducts most of its business in the U.S.

2 of our 10 ETFs in the Spotlight managed to close up but no new highs were made.


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ETFs/Mutual Funds On The Cutline – Updated Through 09/26/2014

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 253 (last week 306) 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. 46 ETFs (last week 58) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 614 (last week 726) above the line and 236 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: Will Europe Be Likely To See Strong Growth Next Year?

92835431The latest upward revision of second-quarter US GDP to 4.6 percent indicates an annualized growth rate of 3 percent or more in the third quarter, said David Kelly, chief global strategist at JP Morgan Funds. After years of disappointing growth, finally the US recovery seems to gather a lot of steam, he observed.

Asked to explain the recent stock sell-off despite the economy gathering a lot of steam, David said it’s difficult to rationalize the day-to-day events of the stock markets. To say geopolitical tensions triggered the latest sell-off would be silly as investors have been dealing with these issues for the last few months. Markets don’t go in one direction and occasionally there is some pressure to have a sell-off. However, every-time one of these corrections get going, it can only go so far before people realize they should start buying in the dip, he argued.

US markets witnessed three sell-offs this year before the latest one though the slide has been much smaller this time around. Asked what triggers these sell-offs, particularly in tech, biotech and social media companies, David said within the market there are stocks which are cheap and which are expensive. But over a period of time, all good news tends to get priced into the market.


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New ETFs On The Block: Flexshares Disciplined Duration MBS Index Fund (MBSD)

139868600FlexShares, the Chicago-based exchange-traded funds unit of Northern Trust, expanded its product line-up with the recent launch of the passively-managed FlexShares Disciplined Duration MBS Index Fund (MBSD). Though FlexShares has a wide array of products in the traditional equity and fixed-income segments, MBSD is the first mortgage-backed securities product from the company.

The new fund tracks the BofA Merrill Lynch Constrained Duration US Mortgage Backed Securities Index, a gauge designed to measure the performance of 30-year, 20-year and 15-year fixed rate residential mortgage pass-through securities publicly issued by US government agencies, including Fannie Mae, Freddie Mac and Ginnie Mae.

Index constituents must have at least one year to maturity and meet the size requirements. Mortgage pass-through securities are backed by a pool of mortgages and the prepayment-risk is distributed across all the loans in the portfolio.


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ETF/No Load Fund Tracker Newsletter For September 26, 2014

ETF/No Load Fund Tracker StatSheet




Market Commentary

Friday, September 26, 2014


Fri pic

[Chart courtesy of]

1. Moving the Markets

As the 5-day chart above clearly demonstrates, it was a roller coaster week, the outcome of which could have been a lot worse, had it not been for Wednesday’s and Friday’s rebound rallies. While they helped in keeping the losses manageable, the major indexes surrendered between 0.96% and 1.48%.

Helping today’s jump off the lows was a stronger than expected GDP number, which provided the firepower necessary to overcome this short-term down trend. The US economy grew at a 4.6% annual pace in the second quarter; while it matched its best performance since the recession it at the same time raises questions as to its sustainability.

Additionally, the consumer sentiment index remained very steady at its highest level since July 2013 and above the more recent August 2014 reading.

Still, it was a volatile week and it remains a wide open question if this oversold bounce actually has the legs to resume and extend the bullish trend.

All of our 10 ETFs in the Spotlight participated in today’s bounce, but no new highs were made.


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