Bouncing Back

Tue pic

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

Markets made a soft rebound today after closing in the red yesterday. The Dow was up 0.57%, The S&P up 0.61% and the Nasdaq up 0.35%

Apple (AAPL) took a big hit today falling 8% after it released its Q4 numbers. AAPL volume was nearly triple the daily average as investors did not take too kindly to hearing that iPhone sales in Q4 fell short of expectations. The company also announced that it is forecasting 2013 Q1 revenue of $42-44mil, which also falls short of Wall Street’s projected $46mil. Overshadowing the news of Apple’s Q4 shortfall was the revelation that Karl Icahn bought $500mil more AAPL shares today, which gave the stock a slight bump, but nothing substantial.

Visa Inc. (V) was another mover of the day, closing up 2.19%.  If you didn’t catch the news of the economy today, consumer confidence climbed to a 5-month high. The index advanced to 80.7 from a revised 77.5 in December. Let’s hear it for optimism! As we know, higher consumer confidence often bodes well for credit card companies such as Visa, which subsequently benefited from the optimistic news today.

You may remember our discussion regarding investor uncertainty in emerging markets. Well, the topic remained hot in the news today as investors continue to pull funds out of emerging markets such as Brazil and India. The trouble is that relatively safe emerging markets tend to get lumped in with the unstable ones. Consider the iShares MSCI Emerging Markets ETF (EEM).  This ETF, which is down 5%, has exposure to Brazil and India, but also in more stable economies like South Korea and Mexico. So, you should keep a close watch on holdings that are in allegedly “safe” emerging market investments in the days to come.

Our 10 ETFs in the Spotlight recouped some of the recent losses and all are back on the bullish side of their respective trend lines.

2. ETFs in the Spotlight

In case you missed the announcement and description of this section, you can read it here again.

It features 10 broadly diversified ETFs from my HighVolume list as posted every Monday. Furthermore, they are screened for the lowest MaxDD% number meaning they have been showing better resistance to temporary sell offs than all others over the past year.

In other words, none of them ever triggered their 7.5% sell stop level during this time period, which included a variety of severe market pullbacks but no move into outright bear market territory.

Here are the 10 candidates:

MaxDD

XLP just crossed its trend line to the downside yesterday but recovered and moved back above it today. Its trailing sell stop (see table below) has not been triggered yet. All others remain in “buy” mode meaning their prices are above their respective long term trend lines by the percentage indicated (%M/A).

Since we have holdings in XLP, I will monitor this position closely. If it slips further, I will liquidate before its sell stop gets triggered in order to minimize the downside risk. You would think that XLP being one of the more conservative ETFs you can own would hold up better than others during a correction as we are seeing now, but it didn’t. So it may very well to be the first “casualty” of this market pullback.

Year to date, here’s how the above candidates have fared so far:

YTD

3. Domestic Trend Tracking Indexes (TTIs)

Our Trend Tracking Indexes (TTIs) joined the rebound and remain on the bullish side of their respective trend lines:

Domestic TTI: +2.45% (last close +2.16%)

International TTI: +4.22% (last close +3.69%)

 

About Ulli Niemann

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