AdvisorShares Weekly Market Review – Week Ending 4/11/2014
Highlights of the Prior Week
The S&P 500 closed the week with a 2.65% loss after dropping a combined 57 points on Thursday and Friday, and the NASDAQ Composite fell 3.1%. We are seeing downside leadership coming from various market niches that provided leadership on the way up last year like social media, biotech and other higher momentum segments like cloud and 3D printing. Actually names like Facebook (NASDAQ: FB) and Gilead Sciences (NASDAQ: GILD) have been going down for a month having dropped 16% and 17% respectively. Twitter (NYSE: TWTR) is down 25% in the last month.
Many are also looking at some cracks starting to appear in what has mostly been a hot IPO market as both King Digital Entertainment (NYSE: KING) and Ally Financial (NYSE:ALLY) both broke their syndicate bids immediately after starting to trade.
The sort of sideways distribution the markets have seen this year, the apparent rolling over of what previously lead the market higher and a very active IPO market are things that often occur very late or at the end of the cycle which are negatives for the market. However there are current indications that have usually been positive including the S&P 500 being well above its 200 day moving average and that the slope of that moving average is positive.
At any given time there are always negatives and positives and it makes sense to keep tabs on both sides of the equation.
Foreign markets each traded in their own worlds. The Shanghai Composite was up 4% for the week barely registering a drop on Friday after Thursday’s large US selloff. The Hang Seng was up 2% after a 0.79% drop on Friday. The Nikkei in Japan dropped every day for a total 7.3% decline and is now down 14% for the year after going up more than 50% last year.
The bigger European markets were all down between 2 and 3% with the vast majority of those declines coming on Friday in probable sympathy with Thursday’s drop in the US.
ETF News & Data
Two weeks ago we noted that the Financial Sector SPDR (NYSE:ARCA: XLF) saw almost $1 billion worth of creations in front of the Fed’s verdict on various banks’ capital allocation plans. Last week we saw over $700 million of those new creations get redeemed followed by $245 million more redemptions this week all but completely unwinding the action from two weeks ago.
In other flows, iShares Emerging Markets ETF (NYSEARCA: EEM) drew $2.4 billion in creations and the Vanguard FTSE Emerging Markets (NYSEARCA: VWO) brought in $590 million consistent with emerging market outperformance over the last month.
There were seven new ETFs launched last week. WisdomTree launched five Japan sector ETFs and Direxion launched a 3X long gold fund and a 3X short gold ETF.
It’s Mount Everest time again so we can probably look forward to plenty of TV shows on Discovery and Nat Geo but for now is an article by Ed Viesturs about overcrowding at the Hillary Step. Viesturs name might be familiar from the 1997 John Krakauer book Into Thin Air but he is very accomplished in his own right with seven Everest summits.
Of course the University of Connecticut won both the men’s and women’s NCAA basketball championships but perhaps the story with more teeth was UConn point guard Shabbaz Napier’s commentary on the inadequacies of the scholarships the players receive to cover everyday expenses like, as one sports reporter put it, bowling and midnight pizza. Napier’s comments come on the heels of Northwestern University’s football team pursuing the right to form a union on the basis that athletes are more like employees of the university as opposed to regular students.
The way that athletes at the highest level engage in NCAA sports seems on the verge of changing forever but it will be interesting to see if there are any adverse effects on the non-revenue producing sports or at smaller schools that are not de facto minor leagues.
Roger Nusbaum, AdvisorShares ETF StrategistSources: Source: Google Finance, Yahoo Finance, ETF.com, Barron’s, XTF.com, NY Times
Weekly ETF Flows
For April 7, 2014 to April 11, 2014
S&P Sector Analysis
As for the sectors of the S&P 500, five outperformed the broad benchmark – Utilities, Staples, Telecom, Energy, and Technology. The remaining five – Materials, Industrials, Discretionary, Financials, and Healthcare – each underperformed. The dispersion between the top-performing and bottom-performing sectors rose to 4.51% this week, with Utilities outperforming all, and Healthcare coming in last.
For April 7, 2014 to April 11, 2014
Sector performances, as measured by the S&P 500 sector indices were: