Special Reports for 2015

Below please find links to all of the Special Subscriber Reports for 2015: •The Best Fidelity Select Sector Fund for The 2nd Half of 2015 •The Best Fidelity Fund for […]

ETF Watchlist for August 26, 2015

WisdomTree Chinese Yuan (CYB)
WisdomTree Bloomberg USD Bullish (USDU)
CurrencyShares Euro Trust (FXE)
CurrencyShares Japanese Yen (FXY)
CurrencyShares Australian Dollar (FXA)
CurrencyShares Canadian Dollar (FXC)
WisdomTree Emerging Market Currency (CEW)

Currency markets are at the heart of present turmoil in financial markets. The center of weakness has been emerging markets, though investors turned bullish on the sector today. Of particular note is the volume in CEW in the chart; the gray bar at the bottom is 69 times average trading volume for the fund. A very large buyer, or group of large buyers, is placing a large bet on emerging market currencies. This may signal at least a short-term bottom.

The U.S. dollar was weak against the yen and euro over the past week.  However, it was strong against currencies in emerging markets, Australia and Canada. The latter are all tied to the China growth story, while the former were sources of U.S. dollar strength earlier in the year. It’s unclear if the spike in the euro and yen is a washout of shorts betting on further weakness, or a trend change.







SPDR Energy (XLE)
FirstTrust ISE Revere Natural Gas (FCG)
Global X Copper Miners (COPX)

Oil and copper prices were under sustained pressure over the past week. Although they saw a small rebound when stock markets rallied, oil is still right near its 52-week low and copper has slumped to a new multi-year low. Energy was the worst performing S&P 500 sector over the past week. The yield on XLE has climbed above 3 percent, although some dividends may be under pressure if the sector doesn’t stabilize.




iShares iBoxx Investment Grade Corporate Bond (LQD)
iShares iBoxx High Yield Corporate Bond (HYG)

Investors are still favoring quality in corporate debt. There was a snap back to high-yield on Tuesday and Wednesday, but the trend is favoring quality credits over the near term.

SPDR Utilities (XLU)
SPDR Pharmaceuticals (XPH)
SPDR Materials (XLB)
SPDR Consumer Staples (XLP)
SPDR Consumer Discretionary (XLY)
SPDR Healthcare (XLV)
SPDR Technology (XLK)
SPDR Financials (XLF)

Before today’s rally, sector losses ranged from 7.7 percent for consumer staples to 12 percent for energy. In relative terms, consumer staples beat the S&P 500 Index by 2.5 percent, as did utilities, industrials and materials. The former two are defensive sectors, while the latter two are sectors that have been battered in 2015 and were not a focal point of selling.

A number of sectors fell through their 50-day moving averages and bounced below their 200-day moving average, including biotechnology. This line could now be resistance, but for now, the more likely course is for these sectors to regain the 200-day line which has served as lower support during the bull market.

The transportation sector broke down during the sell-off. There is some technical support for the fund, but the overall trend is clearly bearish again. A rebound appears much less likely versus the main S&P 500 sectors.

Another area that devolved was real estate. It had been climbing its way out of a bearish trend over many weeks, but over the past few days it gave up all of those gains and fell to a new 2015 low. There are rumors of China selling Treasuries to prop up the yuan and has the potential to keep yields elevated. That would be bad news for this rate-sensitive sector.

On the bright side, regional bank stocks outperformed large bank stocks over the past week. Regional banks are more volatile and their strength is a good signal.







SPDR S&P 500 (SPY)
iShares Russell 2000 (IWM)
S&P Midcap 400 (MDY)
SPDR DJIA (DIA)
PowerShares QQQ (QQQ)
SPDR S&P Dividend (SDY)

Small-caps, the Dow Jones Industrial stocks and dividend shares outperformed the S&P 500 Index over the past week, while the Nasdaq initially underperformed but strongly rebounded.





Market Perspective for August 24, 2015

Equities plunged at the open today after global financial markets fell overnight.  The good news is the market has rallied through the early afternoon, recouping a significant part of the losses. The Nasdaq saw the largest initial losses, with Netflix (NFLX) down a whopping 17.7 percent at the open. Less than an hour later, Netflix was down less than 4 percent, a large move, but not a shocking one for such a volatile stock. A few hours thereafter, the stock was up 2.72 percent.  Without a doubt, volatility is back and investors must remain patient.

The drop and recovery in early trading makes it appear as if much of the selling impulse has been exhausted. Losses from last week and today resembles both the drop in October 2014 and the correction in 2011. Over the weekend, some chartists pointed out the resemblance to the 1987 stock market crash, which also was marked by a one-day selling climax. If the selling has exhausted, the lows from Monday morning should hold over the days ahead.

The genesis for the current selling remains China. Over the weekend, the government decided to forgo a cut in reserve requirements, a move widely anticipated by investors. It did announce the state-run pension fund will be allowed to put up to 30 percent of assets into the stock market, though it wasn’t enough to calm investors. The mainland indexes fell about 8 percent on the day, but they do not directly impact global markets due to capital controls and their absence from major global indexes.

Commodities and other emerging markets haven’t been as lucky. Oil prices continued their steady decline on Monday and have not yet shown a hint of a potential bottom. Markets such as Brazil and Malaysia are not facing acute pain in their equity markets, but steady pressure on emerging market currencies is pushing related ETFs much lower on Monday, continuing a string of losses that began when China allowed the yuan to depreciate in early August.

The U.S. dollar fell in early trading on Monday as well, as investors bet against the Federal Reserve hiking interest rates in September. The euro spiked to new multi-month highs versus the U.S. dollar and the yen reversed all of its losses in 2015. These moves are significant and could be a sign that the dollar rally versus these two developed markets has come to an end. The dollar continues to rally versus emerging market currencies though; it’s possible the change in the euro and yen is a short-term move based on expectations of Fed policy.

Economic data and earnings are light this week and should not have an impact on the larger concerns surrounding the market. However, with stocks appearing to head towards a bounce, any positive data may be latched onto as way of explaining the recovery in stocks. New home sales, durable goods orders and personal income for July will be reported. The second estimate of second quarter GDP will be announced on Thursday. Economists expect growth will be revised upwards from 2.3 percent to 3.3 percent.  As for earnings, retailers are still in the heavy reporting season. Best Buy (BBY), Aeropostale (ARO), GameStop (GME) and Dollar General (DG) headline a week when smaller retailers report.