ETF/No Load Fund Tracker Newsletter For Friday, September 6, 2013
ETF/No Load Fund Tracker StatSheet
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Friday, September 6, 2013
CALM BEFORE THE STORM?
U.S. equity markets closed the trading day near the flat line, bouncing back from their early session lows, which may have been due to an increase in geopolitical strain as President Obama was met with resistance from the global community regarding his plan to carry out a limited military strike on Syria.
Political concerns overshadowed slower-than-forecast jobs growth that eased concern about reductions in Federal Reserve stimulus. For the week, the S&P 500 finished up 1.4 percent and the Nasdaq was up 2 percent. The Dow rose 0.8 percent to snap a streak of four weekly declines.
Prior to the opening bell, it was reported that nonfarm payrolls increased by 169,000 in August, below the consensus of 175,000. The unemployment rate, however, slipped to 7.3% from 7.4%, the lowest since 2008, but that was the result of a drop in the labor force participation rate to 63.2%. The one bright spot could be found in aggregate income, which increased 0.6%. This plodding along of employment growth, no matter how poorly and despite constant revisions to the downside, may be the key reason for the Fed to announce later this month that it will start to taper its asset purchases.
Immediately following the report, crude oil, equity futures, treasuries, and gold futures jumped to their highs. The opening hour saw the S&P lose its 50-day average after Russian President Putin said his country will assist Syria in the event of an external attack.
With the continued uncertainty surrounding the situation in the Middle East, crude oil climbed throughout the day. The energy component ended higher by 2.0% at $110.54 per barrel, registering its highest close since May 2011. Elsewhere, gold futures climbed 1.0%, contributed to the strength of miners as the Market Vectors Gold Miners ETF advanced 1.7%. Consumer staples (+0.1%) and utilities (+0.6%) outperformed as the retreat in yields provided the two groups with a measure of support.
The equity markets found strength in the first week of what could be a volatile September. Stocks were buoyed by signs of U.S. economic prosperity. Additionally, stocks appeared to get a win-win on the Fed asset tapering debate. Data suggested the economy may be healthy enough to withstand a deceleration in stimulus, while Friday’s mixed nonfarm payroll report continued to call into question the quality of the job market recovery, fostering optimism that the Central Bank will use caution in reining in its asset purchases.
Our Trend Tracking Indexes (TTIs) recovered from last week’s drubbing and closed higher:
Domestic TTI: +1.28% (last week +0.84%)
International TTI: +4.31% (last week +2.43%)
Have a great week.
READER Q & A FOR THE WEEK
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A note from reader Scott:
Q: Ulli: What is the sell stop rule on an ETF Bond fund? Is it the same as on a Mutual Bond Fund?
A: Scott: Yes; it’s the same for either. I use 5%, and we’ve been out of bonds months ago when the stop was triggered.
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