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Weekly Writeup

In the Bull’s Eye of the Storm

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After significant stock rallies, one should expect a pullback. Sometimes a pullback becomes a correction. Sometimes it becomes a bear. Yet more often than not… selling activity in a bull market becomes a terrific opportunity to put cash back to work. My primary indicators — the CBOE (VIX) Volatility Index, the US$ Dollar Index (USD), the S&P 500 SPDR Trust (SPY), and the Vanguard MSCI Emerging Markets (VWO) remain decidedly bullish. The VIX is below its 50-day MA and the US$ is also below its 50-Day….

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Long Bonds May Be “Riskier” Than Stocks

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Stock volatility continues to retreat. In fact, the CBOE Volatility Index (VIX) closed the week at 19.03… a level not seen since U.S. equities were hitting their late April highs. The current price of the regional emerging market bellwether, Vanguard Emerging Markets (VWO), is far above its 50-day and 200-day moving average. While there is certainly a risk of a 5%-8% pullback, the overall environment remains favorable for continued capital appreciation in the intermediate term. Ditto for the heralded U.S. stock gauge,…

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Jobless Recovery Ensures Fed “Reflation”

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All 3 Sentiment Indicators favor stock market bullishness. (See charts below.) With that said, 5 weeks of robust percentage gains is typically followed by a “breather.” Before purchasing new positions, then, you may want to wait for stock assets to catch their collective breath. Why have the markets been celebrating mediocre economic news? Essentially, the weakness in both residential housing and in corporate hiring has convinced the Federal Reserve that it must act. How is the Fed taking action? It is…

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Consider Coal and Pipeline Partnerships To Profit From Rising Oil Prices

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ETF Risk Levels remain on the lower end of the color-coded spectrum. The overall sentiment indicators remain bullish: 1. The S&P 500 SPDR Trust (SPY) has held above its long-term trendline for 3 consecutive weeks. That hasn’t been the case since back in April-May. 2. Vanguard Emerging Markets (VWO) has been consistent in hitting new 52-week highs. The current price of VWO may be hitting overbought status, but it remains in a solid uptrend nonetheless. 3. The CBOE Volatility Index (VIX) is stuck in…

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Use Pullbacks For Select ETF Purchases

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A majority of ETF Risk Levels are on the lower end of the color-coded spectrum. It’s not difficult to see why: 1. The S&P 500 SPDR Trust (SPY) is well above its long-term, 200-day moving average. The U.S. stock barometer is essentially flasing a green light for large-cap U.S. blend funds. 2. Vanguard Emerging Markets (VWO) is well above its 200-day MA. When the current price of the main proxy for the MSCI Emerging Market Index is above a key trendline, one is more apt to…

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ETF Risk Levels Have Been Lowered

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ETF Risk Levels have been lowered clear across the board. The reasons are fairly straightfoward, including: (a) the CBOE Volatility Index (VIX) is below a 50-day moving average, (b) the S&P 500 SPDR Trust (SPY) is above a 200-day trendline, (c) Vanguard Emerging Markets (VWO) is above a 200-day trendline and (d) the US Dollar Index (DXY) is below a 200-day moving average. Continue to follow the guidance of the previous 2 months; that is, pursue capital appreciation in regional emerging market benchmarks like…

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A “Barbell” Approach For Your ETF Portfolio?

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Throughout the year, I have pursued higher-yielding income. Energy partnerships, preferred shares, high yield bonds, emerging market bonds — it hasn’t mattered. The corresponding ETFs experienced capital appreciation; meanwhile, the 5%-8% annual yield presented extraordinary value up and above comparable treasuries. With that said, how can I completely knock U.S. treasury bonds? Or for that matter, how can anyone slam the safest of safe harbors. In fact, the only victors from the 2008 disaster ( e.g., treasury bonds, the U.S. dollar, the Japanese yen, gold, etc.) also…

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Rocky Ride May Continue, Though We’ve Seen The 2010 “Bottom”

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The intra-day low for the S&P 500 was 1010 on July 1, while the closing low was 1022 on July 2. We’re very unlikely to see those levels again this year. One reason? Program buyers bolstered the benchmark at the 1040 15% correction level on 3 separate occasions. More precisely, the S&P 500 hit 1040 on August 25, but closed much higher at 1055. The benchmark hit 1040 again on August 27, only to close even higher (1064) that afternoon. And as recently as the last day…

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Developed Markets For Income, Emerging Markets For Growth

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On the positive side, buyers seem to “bargain-hunt” in and around the 1040 level for the S&P 500 This is the exact spot where stocks have hit a 15% correction from the April top… so it is not surprising to see 1040 act as the bullish line in the sand. (Note: The S&P 500 rocketed all the way from 1040 to close more than 2% higher at 1064 on Friday, 8/27/10.) On the negative side, the heralded benchmark is not exactly charting a path of “higher lows.” We’ve…

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Don’t Become A Victim Of The Bond ETF Frenzy

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U.S. stock assets struggled for the second straight week. On the other hand, the assets that I have been recommending continue to gain. It follows that when your combination of growth ETFs and income ETFs are profitable, there’s little reason to make significant changes. For U.S. assets: “Continue maintaining a high income approach. With treasury bonds yielding so little, the credit spreads between treasuries and preferred stock/high yield bonds/MLPs is still wide. That’s a good thing! Look at iShares High Yield (HYG) as…

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