ETF/No Load Fund Tracker Newsletter For Friday, July 6, 2012

ETF/No Load Fund Tracker StatSheet




Market Commentary

Friday, July 6, 2012


US equities slumped Friday with the Dow Industrials and the S&P 500 finishing the week lower following a US Labor Department report that showed employers added fewer than estimated jobs in June.

Treasuries advanced for the second straight day as investors sought refuge in safe-haven assets in anticipation of another round of assets purchase by the Federal Reserve to boost a faltering job market.

The Dow Jones Industrial Average (DJIA) slipped 0.96 percent to end the day at 12,772.47, off 0.8 percent for the week. Only five of the 30 components within the blue-chip index ended in the positive region.

Ten year Treasuries capped the month on a high after jobs data showed employers added only 80,000 jobs in June, well short of the projected 100,000. Compared to 226,000 jobs a month in the first quarter, hiring in the second quarter dropped sharply to 75,000.

The S&P 500 Index (SPX) lost 0.9 percent to finish at 1354.68, off 0.6 percent for the week. The index has closed lower in the last two of the three weeks.

Yield on the 10-year Treasury dropped five basis points to 1.54 percent in late afternoon trading, New York time, off 10 basis points for the week, the highest since in more than a month. 30-year bond yields fell six basis points to 2.66 percent as unemployment held at 8.2 percent for the second consecutive month.

ETFs in the news:

As US stocks fell about one percent on jobs selloff, investors rushed to the relative safety of government bonds, anticipating further rounds of assets purchase by the US Fed to prop up the sagging job market.

The PIMCO 25 Year Zero Coupon U.S. Treasury Index Fund (ZROZ) emerged among the winners, adding 1.58 percent for the day. The bond fund is up an impressive 6.65 percent year-to-date and is currently trading close to its 52-week highs.

Other long-term US debt funds such as the Vanguard Extended Duration Treasury ETF (EDV) and the iShares Barclays 20 Year Treasury Bond Fund (TLT) also made impressive gains, adding 1.34 percent and 0.93 percent, respectively.

It was a bad day for commodities across the board, led by energy and precious metals. Natural gas sank 5.6 percent on the day while WTI crude slipped 3.5 percent. Agricultural commodities also softened for the first time in days, with wheat, corn and soybeans ending the day’s session lower.

The United States Natural Gas Fund LP (UNG) crashed Friday, plummeting 5.33 percent on the day.  Agricultural ETFs such as the DB Agriculture Double Long ETN (DAG) and the UBS E-TRACS CMCI Agriculture Total Return ETN (UAG) gapped lower for the day, shedding 3.74 percent and 2.62 percent respectively.

Our Trend Tracking Indexes (TTIs) vacillated with the markets and ended the week as follows:

Domestic TTI: +2.63% (last week +2.38%)

International TTI: -2.23% (last week -2.15%)

Have a great week.


Disclosure: No holdings



All Reader Q & A’s are listed at our web site!
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A note from reader HB:

Q: Ulli: If I can get an overall feel from your report, the M-index is the momentum, but also higher momentum means higher risk. Would it be safe to say, in general, if I look at the DD% (0 being at high), I should look for the DD% first, then % ma, then M-index?

I know there is no real formula, but was hoping to put together a formula I could plug #s into to provide “my” best option.

A: HB: Where the markets are at currently, your best bet is to use one of the model ETF portfolios as opposed to stringing together a variety of ETFs. Pick the one that best suits your risk tolerance. They have a mix of bonds and equities to balance out market fluctuations and, when used with my recommended sell stop discipline, will clearly define your downside risk.



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About Ulli Niemann

Ulli Niemann is the publisher of "The ETF Bully" and is a Registered Investment Advisor. Learn more
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