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Weekly Writeup

Feeling Bullish? Better Travel Abroad!

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For the second time since the U.S. stock correction began in late April, Mr. Market cried, “Uncle.” The first time was back in mid-June, when the S&P 500 briefly climbed back above its 200-day trendline. It didn’t last, though. Here in August, Mr. Market literally begged Uncle Ben Bernanke for more monetary stimulus at Tuesday’s Fed meeting. The Fed Chairman complied, yet U.S. stocks still finished out the week with huge losses. Worse yet, the S&P 500 has failed to hold above its 200-day moving average…

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Bulls Finally Take Charge of Stocks

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Before earnings season began in the 2nd week of July, there were scores of predictions about the imminent bear market. Throughout the current correction, however, I’ve maintained that a new bear for stock assets is (and was) highly unlikely. I had raised ETF Risk Levels. What’s more, even though I’ve reduced them over the course of the last month, some Risk Levels remain elevated. Stepping back, you may recall that the DJ Transports and DJ Industrials combined for a “Dow Theory Sell Signal.” The price of the S&P 500 had fallen below…

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Emerging Markets Keep Rolling, U.S. Markets “Trendless”

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U.S. stocks had a blockbuster month, as the S&P 500 garnered roughly 7.2%. However, the overwhelming majority of the benchmark’s gains came in the first 3 weeks; the index was effectively flat over the last trading week in July. Fundamentally, a bullish perspective makes the most sense over the intermediate term. As many as 78% of S&P 500 corporations have exceded earnings expectations, while 68% or more beat revenue projections. Moreover, in spite of widespread economic uncertainty, a solid majority of key companies increased their outlook for future profitability….

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U.S. Stock ETFs May Follow In The Footsteps Of Emerging Market ETFs

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In last week’s write-up, I expressed a long-held conviction that emerging market stock ETFs are safer than U.S. stock ETFs. This is clearly evident in the limited volatility and steady uptrends by markets like Malaysia (EWM) and Chile (ECH); it is also evident in the “higher lows” for BRIC nations like China (PGJ) and Brazil (EWZ). Notice how China (PGJ) hit rock bottom in May, then went on to chart “higher lows” in June and July. The U.S. markets hit “lower lows” in June and July,…

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Emerging Market ETFs Are Safer Than U.S. ETFs

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Last week, in “2 Out of 3 Aint Good Enough,” I explained why the market’s price movement still had bearish overtones. Friday’s 3% sell-off for many U.S. stocks merely confirmed it. Once more, ETF investors need to come back to my 3 major indicators: (1) the CBOE Volatility Index (VIX), (2) the S&P 500 and (3) Vanguard Emerging Market (VWO). Right now, all 3 are “bearish.” The VIX settled at 26.25. Right now, one simply can’t get excited about U.S. equities until…

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2 Out Of 3 Aint Good Enough!

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S&P 500 stocks rocketed 5.4% off calendar year lows in a matter of just 4 days. That was the biggest single-week jump in over a year! Before celebrating an end to the correction, however, we need to use a little common sense. First, the S&P 500 is still 11.5% off its April highs. Second, we witnessed a stock run-up peter out at its 200-day trendline already… so it could easily happen again. Third, the broad market equity indicator is much further below its 200-day moving average here…

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Sitting on Cash… Just Like U.S. Corporations

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Alan Greenspan described the current economic “soft patch” as a normal feature in a cyclical recovery. That may very well be. Nevertheless, the former chairman of the Federal Reserve would not be able to classify the recent price movement of market-based securities as customary. Stocks, bonds, currencies and commodities have been acting very strangely. U.S. stock assets declined precipitously over the past week, but foreign equities stabilized. The U.S. Dollar Index dropped below a 50-day moving average for the first time in 7 months, yet the battered “euro” gained ground. Gold even fell below…

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One Step Forward, Two Steps Back?

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The S&P 500 closed back in correction territory — 11.6% below its April peak. What’s more, the price on the premier U.S. stock barometer fell back below its 200-day trendline. Equally disturbing, the CBOE Volatility Index (VIX) spiked back above a critical moving average. Additionally, a VIX climbing above 25, as opposed to one that is falling below it, is a confidence weakener at best and a morale killer at worst. Few investors benefit from participating in excessive volatility. Last week, these same market indicators were…

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2 Out Of 3 “Aint” Bad

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The worst of the correction may finally be behind us. The S&P 500 had fallen 14.5% from its April top to its June bottom. As of today’s close, however, the U.S. market barometer pared losses to roughly 8%. Do we know for certain that the corrective phase has run its course? No… but 2 out of 3 key indicators mentioned regularly in this column turned favorable for the first time in 6 weeks. 1. The CBOE Volatility Index (VIX). On a consistent basis, I…

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Blessings and Curses

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The market rallied in impressive fashion this week, with the S&P 500 gaining a eye-popping 2.7%. Should we be getting excited? Unfortunately, you may wish to keep the cork on the champagne bottle. For one to feel more confident that a correction has run its course, we’d like to see stocks rally on game-changing news. That’s the problem… there really wasn’t any! Consumer sentiment was cheery, but retail sales numbers were dreadful. Jobless claims dipped, yet overall unemployment claims remain above…

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