ETF/No Load Fund Tracker StatSheet
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Friday, January 4, 2013
S&P 500 ENDS WEEK AT HIGHEST LEVEL SINCE 2007; EUROPE RISES ON US JOBS DATA
US stocks closed higher Friday with the S&P 500 index rising to its highest closing level since December 2007 after data showed the economy added jobs at about the same pace as the prior month.
Before the markets opened today, a Labor Department report showed non-farm payrolls rose by 155,000 and the jobless rate stood at 7.8 percent in December following a revised 161,000 gain in November that was higher than initially estimated. The unemployment rate matched the lowest since December 2008 after November’s jobless rate, originally reported at 7.7 percent, was changed to 7.8 percent following annual revisions conducted each December.
A separate report from the Institute for Supply Management showed its services-sector index rose to 56.1 percent in December from 54.7 percent in the previous month, indicating acceleration in growth. Economists surveyed by Bloomberg projected a decline to 54.1.
The Dow Jones Industrial Average (DJIA) climbed 44 points while the S&P 500 Index (SPX) rose 7 points to 1466, its highest closing level since December 31, 2007 and higher than a previous high set in September. The benchmark is up 4.6 percent for the week, its largest weekly percentage gain since December 2011. It’s been straight up since the post election sell off in November at a pace that I consider neither realistic nor sustainable.
The Chicago Board Options Volatility Index or VIX fell five percent to 13.83 in New York. The volatility index slumped 39 percent this week, the highest ever meaning investor complacency is at extreme levels.
Treasury 10-year yields fell from a more than eight-month high after US unemployment rate for December came in slightly higher than forecast, spurring speculation the Federal Reserve’s accommodating measures may not end anytime soon.
The US dollar weakened slightly against the euro on Friday and retreated from a 29-month high against the Japanese Yen after reports showed the US economy continued to add jobs at a steady pace in December.
Meanwhile, European stocks extended gains into the fourth straight session on Friday after US data showed the country’s service sector gained pace in December, and the economy continued to add jobs at a steady pace, broadly meeting expectations.
Our Trend Tracking Indexes (TTIs) rallied with the indexes and closed the week as follows:
Domestic TTI: +2.35% (last week +0.78%)
International TTI: +9.26% (last week +6.33%)
I don’t ever remember having seen the International TTI go as vertical since its creation in the late 80s as it has in recent weeks. Let me be the voice of reason by pointing out that this race into the sky can simply not continue without any setbacks, so be prepared in the event this rally comes to an abrupt halt and/or shifts into reverse all of a sudden.
READER Q & A FOR THE WEEK
All Reader Q & A’s are listed at our web site!
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A note from reader Joy:
Q: Ulli: I am new to investing in mutual funds/ETFs. Usually I buy stocks but I am never in luck. The stock just keeps falling down for next few weeks or so and, unfortunately, the day I bought was the all time high for that stock.
I started reading your blog lately, but have not implemented much. I just bought one mutual fund and I had a question on that.
If I buy the mutual fund and say the fund never goes up for next few days or weeks. So, my 7% sell-stop would be the purchase price in this case, am I correct on that one? If the fund goes up after few months, my new stop would be based on the new high? I am assuming I understood it correctly?
A: Joy: Yes, your understanding of my trailing sell stop discipline is correct.
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