Treasuries performed well in the recent sell-off, thanks to plunging bond yields.
Traditional defensive sectors also performed well, with utilities lifted by lower yields.
Low volatility ETFs such as SPLV and USMV turned in strong performances relative to the broader market.
On September 3, in Playing Defense With ETFs, we looked at some funds that could be used for playing defense against a market decline. Several funds were discussed, including Guggenheim Defensive Equity (NYSEARCA:DEF), SPDR Healthcare Select Sect ETF (NYSEARCA:XLV), PowerShares DB U.S. Dollar Bullish Fund (NYSEARCA:UUP), SPDR Gold Shares (NYSEARCA:GLD), iShares 7-10 Year Treasury (NYSEARCA:IEF) and iShares Barclays 20+ Year Treasury (NYSEARCA:TLT)…. To Continue Reading Please Click Here.
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VYM is a broadly diversified dividend ETF with a relatively high yield compared to similar funds.
Aside from the 2008 financial crisis which hit all funds, VYM has consistently increased its dividends over time.
The overall performance is strong, but historically, VYM has outperformed other dividend ETFs during bull markets and underperformed during bear markets.
Dividend ETFs are more popular than ever, thanks to the central banks of the world giving us zero interest rate policies (ZIRP), but the word “dividend” in an ETF means different things in different funds. Some funds target very high-yields, such as Global X SuperDividend ETF (NYSEARCA:SDIV), but others such as Vanguard Dividend Appreciation ETF (NYSEARCA:VIG) aim for growth, while WisdomTree has an entire lineup of ETFs that use dividends as a selection factor in their indexes. Investors benefit from having a wide range of choices among dividend funds, with sector and international exposure sliced and diced in many different ways. Picking the right fund for a portfolio can be a chore, though, since investors can dig through dozens of options… To Continue Reading, Please Click Here.
*Please note, this article was written and published as a contribution for Seeking Alpha. To finish reading the article you will be redirected to their site.
Click here to view the October 2014 ETF Investor Guide Market Perspective: Stocks Poised to Rebound After a Modest Sell-Off Investors are still searching for explanations for the selling in financial markets that […]
PowerShares DB U.S. Dollar Index Bullish Fund (UUP)
Some of the very short-term technical indicators for UUP are signaling a dollar will soon pullback. A U.S. dollar rally was bad for stocks in September, but now stocks look poised to rally. The conditions in the market during the sell-off, a strong dollar, weak stocks and strong bonds, appears to have concluded. It should be expected the dollar to retreat given its significant run-up over the past few months.
Below is a chart that traders are looking at as trading gets underway on Wednesday. The Russell 2000 Index has retraced 50 percent of its decline. Short-term traders look to levels such as a 50 percent retracement as a test of the market’s strength. The PowerShares QQQ (QQQ) has already pushed above 50 percent and a move higher by IWM would be bullish for the week ahead.
Oil was the hardest hit commodity and equity sector during the September and October sell-off. Stocks have bounced sharply since last Wednesday’s intraday low, but oil hasn’t even managed a dead cat bounce yet. It is behaving more like an anvil to date, dropping and staying down.
In contrast, XLE has gone up with stocks and as expected, it’s also rebounding more strongly than the broader market.
One of these two trends is likely to change in the next week; the momentum favors a rally in oil given that the general outlook for stocks appears bullish.
Bonds are painting a bullish picture for stocks, which can be seen in the candlestick chart for TLT. The thin line above and below the thicker bars indicates the intraday high and low for the stock. Typically, that long spike represents exhaustion of a move, caused by investor sentiment reaching an extreme. On the upside, investors panic buy as the price runs away from them, and on the downside, investors give in to the selling and dump at a loss for fear of greater losses. As can be seen in the chart of SPDR S&P 500 (SPY), a similar move was also seen in stocks.
Another important fund to watch this week is HYG, as high yield bonds have rebounded. The chart below is adjusted for dividends, but if HYG were to rally as strongly as it did last week, it could push to a new high for the year even if we ignore dividends. Such a move would be very bullish for the stock market.
Emerging markets have not bounced along with the U.S. and developed markets. After a politically driven bounce in Brazilian shares, that market has turned lower. Chinese shares have also struggled to rally. Indian shares have been holding for several months now, while Russian shares have also failed to bounce. Since Brazil and Russia have large exposure to energy, and oil prices have stayed low, this failure to bounce is not a surprise. Since oil is likely to bounce soon, emerging markets may finally join in the rally.
Through October 15, it was broadly a down month for the markets. The S&P 500 Index made its intraday high for the year on September 19, and it made its […]
