ETF/No Load Fund Tracker Newsletter For Friday, October 26, 2012
ETF/No Load Fund Tracker StatSheet
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Friday, October 26, 2012
US EQUITIES FINISH SESSION UNCHANGED BUT RETREAT FOR THE WEEK; EUROPE PUSHES HIGHER ON US GDP DATA
US equities capped a choppy and sloppy week nearly flat Friday, but extended weekly losses after uninspiring earnings reports failed to offset investor concerns about a global slowdown and post-election uncertainties.
Gross Domestic Product, the broadest gauge of economic activity, expanded at a faster annual clip of 2 percent in the third quarter, according to government data. The figure was higher than the 1.7 percent rate analysts had forecast. Separately, the Thomson Reuters/University of Michigan consumer sentiment index rose to 82.6 in October from 78.3 in the previous month, falling short of the 83 mark economists had projected.
Down 1.8 percent for the week, the Dow Jones Industrial Average (DJIA) added 4 points to end at 13,107. Laggards outpaced winners 18 to 12 as breadth within the 30-stock blue-chip index turned negative.
Extending its weekly decline to 1.5 percent, the S&P 500 Index (SPX) shed 1 point to finish at 1412 with financials slipping the most and telecommunications pacing the gains among its 10 business groups.
Benchmark 10-year yields fell from near five week highs as prices rose after the latest Spanish unemployment rate hit a record high of 25 percent, raising concern the region’s debt crisis may worsen.
Investors sought refuge in safer assets after German Finance Minister Wolfgang Schaeuble reportedly expressed doubts over Greece continuing in the currency union after it failed to meet targets for the next bailout tranche.
The entire European debt circus is becoming nothing but a farce. For some spot on and truthful words on the subject, please listen to the always entertaining Nigel Farage in his latest video on the subjugation of Europe:
The US dollar pared gains on weak demand after latest data showed the US economy grew at an annual pace of 2 percent in the third quarter. The ICE dollar index, a gauge of the greenback’s strength against a basket of six currencies, fell to 80.046 from 80.180 before the GDP data. Still, the dollar index is higher by 0.5 percent for the week while the euro is off 0.7 percent with troubling news popping up across the region.
Meanwhile, European shares made modest gains Friday as resource firms bounced back to reverse early weaknesses following a surprise growth in US GDP. The pan-European Stoxx Europe 600 index finished 0.1 percent higher after sinking 0.3 percent in early trade.
Spanish equities lagged Europe with the IBEX 35 index dropping 0.1 percent after data released Friday revealed jobless rates hit a record high of 25 percent in the third quarter as the economy remained in deep recession.
Lifted by oil major Total SA and drug maker Sanofi SA, the French CAC 40 index stood out among the gainers, finishing 0.7 percent higher. French banks, however, slipped after ratings agency Standard & Poor cut the credit ratings of BNP Paribas and downgraded 10 lenders, including Credit Agricole.
The DAX 30 index added 0.4 percent in Frankfurt, helped by chemical giant BASF SE and industrial conglomerate Siemens AG.
The FTSE 100 index closed marginally higher in London, adding less than 1 percent on the day.
Our Trend Tracking Indexes (TTIs) continued to slide with the overall market. More downside momentum, possibly after the election, may very well be enough to propel us into bear market territory.
However, right now we’re still on the plus side of the trend lines and ended the week as follows:
Domestic TTI: +1.25% (last week +1.69%)
International TTI: +2.79% (last week +4.03%)
Have a great week.
Disclosure: No holdings in the ETFs discussed above
READER Q & A FOR THE WEEK
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A note from reader Kathy:
Q: Ulli: Regarding the ETF model fund (#7) that includes the components of the PRPFX fund, why is it that you have sold the PRPFX fund from the other portfolios but none of the components ETFs in this fund?
Am I missing something? Probably!
A: Kathy: Here’s what I said in the description of model #7:
1. Since these 8 ETFs represent only one fund, namely PRPFX, we can to apply a different exit strategy. For that purpose, I will not track the high points made for each ETF, as with the other 6 models, but measure my 7% drop from the high point this entire portfolio has made.
2. Alternatively, you can sell this entire portfolio once our domestic TTI has crossed into bear market territory or hold on to only those positions that are maintaining upward momentum. That solves the issue of “what to buy” if you had liquidated 100%.
To do something different from the other portfolios, I have chosen the second approach and will hold until the TTI signals a ‘Sell.’ There is no right or wrong here, it was simply my preference.
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