Market Update For Week Ending 6/24/2011

June 27th, 2011
Index Close Net Change % Change YTD YTD %
DJIA 11,934.58 -69.78 -0.58 +357.07 3.08
NASDAQ 2,652.89 +36.41 1.39 +0.02 0.00
S&P500 1,268.45 -3.05 -0.24 +10.81 0.86
Russell 2000 797.79 +16.04 2.05 +14.14 1.80
International 1,633.62 -13.11 -0.80 -24.68 -1.49
10-year bond 2.87% -0.07% -0.42%
30-year T-bond 4.17% -0.03% -0.16%
International index is MSCI EAFE index. Bond data reflect net change in yield, not price. Indices are unmanaged and you cannot directly invest in an index.
More market data

Market Wrap
U.S. stocks ended in mixed territory this week as somewhat softer economic data balanced with investors’ desire to hunt bargain-priced technology shares in particular. The Dow industrials shed 0.58% and the broad S&P 500 lost 0.24%, but the technology-rich Nasdaq bounced 1.39%. The small-cap Russell 2000 gained 2.05%. Foreign shares sank 0.80% amid Greece’s latest round of debt concerns, while investors looking for traditionally less volatile havens poured back into the Treasury market, sending bond yields lower. For more on recent trading activity, please read:

Fed Sees Economic Drags Continuing Into 2012
Few expected the Federal Reserve to announce a monetary policy shift this week, so news that U.S. short-term interest rates remain effectively at zero did little to move the markets. However, Chairman Ben Bernanke’s characterization of the economy as being confronted by “stronger and more persistent headwinds” led some economists to lower their outlook on growth ahead. What did Bernanke say, and what does it entail for the economy? For more on the latest from the Federal Reserve, please read:

European Banks Race To Keep Greece Solvent
The Greek government passed a crucial test of confidence this week and gave many investors hope that the country would not default on its sovereign debt. However, plenty of challenges remain, including a key austerity vote and talks with the banks that hold billions of dollars in Greek bonds. For a look at the latest developments in this story driving global markets, please read:


June 20th, 2011

Our colleague Dr. Frey has developed a useful program for evaluating one aspect of ETF’s. I found the yields to be the most interesting. Here is a summary of one set of results:

ETFs with options and yields over 1%

(131 selected from 1276 ETFs)
(option volumes and number from nearest expiration date, as of 6/19/11)
Symbol Name Option Volume yield

AAXJ iShares MSCI All Country Asia 48 (3) 1.51
AGG iShares Barclays Aggregate Bon 15 (1) 3.38
AMJ JPMorgan Alerian MLP Index ETN 293 (9) 4.99
BRF Market Vectors Brazil Small-Ca 390 (41) 1.29
CHIX Global X China Financials ETF 1 (1) 2.31
CSJ iShares Barclays 1-3 Year Cred 2 (1) 2.21
DFJ WisdomTree Japan SmallCap Divi 2 (1) 1.80
DIA SPDR Dow Jones Industrial Aver 5884 (85 2.41
DVY iShares Dow Jones Select Divid 332 (12) 3.24
DZK Direxion Daily Dev Mkts Bull 3 204 (39) 1.98
EEB Guggenheim BRIC 164 (7) 1.88
EEM iShares MSCI Emerging Markets 4258 (21 1.33
EFA iShares MSCI EAFE Index 4463 (49) 2.26
EFG iShares MSCI EAFE Growth Index 42 (4) 1.69
EFV iShares MSCI EAFE Value Index 41 (2) 3.05
EPP iShares MSCI Pacific ex-Japan 927 (21) 3.18
EPU iShares MSCI All Peru Capped I 1086 (4 2.16
EWA iShares MSCI Australia Index 955 (19) 3.12
EWC iShares MSCI Canada Index 428 (16) 1.52
EWG iShares MSCI Germany Index 612 (19) 1.06
EWH iShares MSCI Hong Kong Index 284 (7) 2.31
EWI iShares MSCI Italy Index 52 (4) 1.71
EWJ iShares MSCI Japan Index 1043 (11) 1.38
EWM iShares MSCI Malaysia Index 191 (9) 2.30
EWP iShares MSCI Spain Index 624 (42) 4.99
EWS iShares MSCI Singapore Index 147 (4) 2.99
EWT iShares MSCI Taiwan Index 1035 (5) 1.84
EWU iShares MSCI United Kingdom In 36 (4) 2.27
EWZ iShares MSCI Brazil Index 4983 (31) 3.78
EZA iShares MSCI South Africa Inde 263 (30) 2.50
FXA CurrencyShares Australian Doll 592 (25) 3.22
FXI iShares FTSE China 25 Index Fu 4565 (41 1.38
FXO First Trust Financials AlphaDE 10 (1) 1.21
GDX Market Vectors Junior Gold Min 1950 (29) 7.05
GXC SPDR S&P China 37 (5) 1.18
HAO Guggenheim China Small Cap 132 (4) 1.52
HYG iShares iBoxx 1762 (17) 7.79
IAI iShares Dow Jones US Broker-De 160 (11) 1.66
IAT iShares Dow Jones US Regional 107 (16) 1.18
ICF iShares Cohen & Steers Realty 120 (11) 2.53
IEF iShares Barclays 7-10 Year Tre 877 (15) 3.01
IEI iShares Barclays 3-7 Year Trea 44 (4) 1.97
IEV iShares S&P Europe 350 Index 114 (15) 2.25
IGE iShares S&P North Amer Natural 137 (23) 1.42
IJS iShares S&P SmallCap 600 Value 214 (22) 1.14
ILF iShares S&P Latin America 40 I 536 (24) 2.23
IOO iShares S&P Global 100 Index 47 (4) 2.04
IVE iShares S&P 500 Value Index 146 (22) 2.00
IVV iShares S&P 500 Index 369 (29) 1.73
IWB iShares Russell 1000 Index 842 (8) 1.61
IWD iShares Russell 1000 Value Ind 42 (7) 1.90
IWF iShares Russell 1000 Growth In 140 (13) 1.23
IWM iShares Russell 2000 Index 12508 (120) 1.05
IWN iShares Russell 2000 Value Ind 316 (23) 1.64
IWR iShares Russell Midcap Index 512 (15) 1.42
IWS iShares Russell Midcap Value I 72 (9) 1.89
IWV iShares Russell 3000 Index 342 (17) 1.54
IXC iShares S&P Global Energy 83 (11) 1.66
IYE iShares Dow Jones US Energy 75 (19) 1.16
IYF iShares Dow Jones US Financial 492 (10) 1.07
IYH iShares Dow Jones US Healthcar 29 (7) 1.41
IYM iShares Dow Jones US Basic Mat 103 (15) 1.15
IYR iShares Dow Jones US Real Esta 5118 (37 3.17
IYT iShares Dow Jones Transportati 490 (25) 1.07
IYZ iShares Dow Jones US Telecom 216 (6) 2.79
JNK SPDR Barclays Capital High Yie 160 (8) 8.29
KCE SPDR KBW Capital Markets 79 (4) 1.67
KIE SPDR KBW Insurance 191 (12) 1.63
KRE SPDR KBW Regional Banking 214 (10) 1.40
LBJ Direxion Daily Latin America B 76 (5) 2.07
LQD iShares iBoxx 258 (8) 4.66
MUB iShares S&P National AMT-Free 24 (4) 3.59
NLR Market Vectors Uranium+Nuclear 2 (1) 4.54
OEF iShares S&P 100 Index 466 (15) 1.84
PCEF PowerShares CEF Income Composi 2 (1) 8.57
PCY PowerShares Emerging Mkts Sove 1 (1) 5.77
PFF iShares S&P U.S. Preferred Sto 102 (9) 7.19
PGF PowerShares Financial Preferre 73 (3) 6.85
PHB PowerShares Fundamental High Y 11 (2) 6.85
PZA PowerShares Insured National M 28 (7) 4.82
RSP Rydex S&P Equal Weight 50 (6) 1.30
RWR SPDR Dow Jones REIT 18 (5) 2.71
SCHB Schwab U.S. Broad Market ETF 12 (2) 1.43
SCHC Schwab International Small-Cap 22 (4) 2.15
SCZ iShares MSCI EAFE Small Cap In 15 (2) 2.70
SDY SPDR S&P Dividend 64 (11) 3.15
SLX Market Vectors Steel ETF 79 (16) 1.47
SOXX iShares PHLX SOX Semiconductor ) 1.05
SPY SPDR S&P 500 15912 (127) 1.73
TIP iShares Barclays TIPS Bond 449 (16) 3.15
TLT iShares Barclays 20+ Year Tre 6890 (43) 4.20
TMF Direxion Daily 20+ Yr Trsy Bul 126 (14) 1.58
VBR Vanguard Small Cap Value ETF 21 (3) 1.78
VEA Vanguard MSCI EAFE ETF 279 (7) 2.34
VEU Vanguard FTSE All-World ex-US 16 (3) 2.03
VGK Vanguard MSCI Europe ETF 1369 (19) 4.24
VIG Vanguard Dividend Appreciation 1 (1) 1.93
VNQ Vanguard REIT Index ETF 105 (14) 3.08
VO Vanguard Mid-Cap ETF 51 (6) 1.08
VTI Vanguard Total Stock Market ET 144 (17) 1.71
VTV Vanguard Value ETF 21 (5) 2.26
VUG Vanguard Growth ETF 126 (9) 1.10
VV Vanguard Large Cap ETF 34 (4) 1.69
VWO Vanguard MSCI Emerging Markets 512 (18) 1.66
VYM Vanguard High Dividend Yield I 3 (2) 2.55
XHB SPDR S&P Homebuilders 932 (11) 1.79
XLB Materials Select Sector SPDR 2921 (21) 3.09
XLE Energy Select Sector SPDR 9151 (84) 1.36
XLF Financial Select Sector SPDR 875 (4) 1.02
XLI Industrial Select Sector SPDR 1227 (22) 1.69
XLK Technology Select Sector SPDR 731 (11) 1.26
XLP Consumer Staples Select Sector 310 (12) 2.50
XLU Utilities Select Sector SPDR 1064 (11) 3.94
XLV Health Care Select Sector SPDR 2372 (13) 1.70
XLY Consumer Discret Select Sector 1871 (18) 1.37

Market Update For Week Ending 6/17/2011

June 19th, 2011
Index Close Net Change % Change YTD YTD %
DJIA 12,004.36 +52.45 0.44 +426.85 3.69
NASDAQ 2,616.48 -27.25 -1.03 -36.39 -1.37
S&P500 1,271.50 +0.52 0.04 +13.86 1.10
Russell 2000 781.75 +2.21 0.28 -1.90 -0.24
International 1,646.73 -16.18 -0.97 -11.57 -0.70
10-year bond 2.94% -0.03% -0.35%
30-year T-bond 4.20% +0.02% -0.13%
International index is MSCI EAFE index. Bond data reflect net change in yield, not price. Indices are unmanaged and you cannot directly invest in an index.

More market data
Market Wrap

U.S. blue-chip stocks broke their recent losing streak as bargain hunters returned to Wall Street, but the gains were limited by economic uncertainty. The Dow industrials led the way, up 0.44%, followed by the small-cap Russell 2000 and broad S&P 500, which gained 0.28% and a scant 0.04%, respectively. The technology-rich Nasdaq fell 1.03%. New concerns about Greece's ability to repay its debt sent global capital fleeing perceived risk and left foreign shares down 0.97% for the week. Treasury yields were mixed. For more on recent trading activity, please read:

U.S. Consumer Sentiment Edges Lower
The perception that the labor and housing markets remain lukewarm at best has been curbing the mood in American households, but the data do not indicate that conditions are getting appreciably worse. A key gauge of consumer sentiment from the University of Michigan slipped 2.5 points to 71.8 this week — not euphoric, but far from gloomy. According to the people who conducted the research, this is in line with what they have seen going back to late 2008, and as such may not reflect a sense of deeper malaise. For more, please read:
Will Greece Default? Debt Rating Agencies Weigh In
Many investors spent much of the week with one eye watching the dollar/euro exchange rate as Greece's credit problems flared back into the headlines. While France and Germany agreed on Friday to find a way for Greece to manage its obligations, the leading rating agencies are still lining up to downgrade the European banks that hold over $50 billion in Greek debt. And if the government in Athens fails, those bonds could go into default by the end of August. For a lucid discussion of what is at stake in Europe now, please read:

Westside Investment Management Advisors are Registered Representative with and offer securities and advisory services through LPL Financial, Member FINRA/SIPC

Market Update For Week Ending 6/10/2011

June 19th, 2011
Index Close Net Change % Change YTD YTD %
DJIA 11,951.91 -199.35 -1.64 +374.40 3.23
NASDAQ 2,643.73 -89.05 -3.26 -9.14 -0.34
S&P500 1,270.98 -29.18 -2.24 +13.34 1.06
Russell 2000 779.54 -28.59 -3.54 -4.11 -0.52
International 1,662.91 -41.81 -2.45 +4.61 0.28
10-year bond 2.97% -0.03% -0.32%
30-year T-bond 4.18% -0.05% -0.15%
International index is MSCI EAFE index. Bond data reflect net change in yield, not price. Indices are unmanaged and you cannot directly invest in an index.

More market data
Market Wrap

U.S. stocks sank for the sixth week in a row as global economic unease left investors unwilling to accept risk. The blue-chip Dow fell 1.64%, abandoning the psychologically crucial 12,000-point level for the first time since March, while broader benchmarks gave up 2.24% to 3.54%. Foreign shares posted losses in line with their U.S. counterparts, down 2.45% for the week in dollar terms. Bond yields receded once again as risk-wary investors opted for the relative security of Treasury debt. For more on recent trading activity, please read:

The End Of 'Quantitative Easing' Looms
The Federal Reserve has promised that it will end its second massive round of quantitative easing — the so-called "QE2" program — by the end of this month. At this point, the Fed only has $50 billion left to spend on new government debt, but it will reinvest the interest on its already massive current holdings. For more on the roughly $2.4 trillion legacy of QE2 and its predecessor, please read:

Robert Shiller Sees More Housing Pain Ahead
The celebrated Yale economist Robert Shiller, who initially warned that the housing bubble was becoming an unsustainable case of "irrational exuberance," sees little grounds for optimism ahead. As he puts it, the boom and bust were simply so large that we are now in unknown territory. Is he right? Or are housing prices another of those factors that nobody — not even the gurus — can predict? For more on Shiller's recent commentary, please read:

Westside Investment Management Advisors are Registered Representative with and offer securities and advisory services through LPL Financial, Member FINRA/SIPC

Update for the Week Ending 6/3/11

June 13th, 2011

Market Wrap
U.S. stocks retreated for the fifth week in a row as a lack of encouraging economic news gave few investors a reason to dip back into the market after the long weekend. The Dow and S&P 500 fell 2.33% and 2.32%, respectively, while the Nasdaq was close behind with a 2.29% loss. The small-cap Russell 2000 suffered even worse, down 3.36% for the week. Foreign shares held up somewhat better, losing 0.22% in dollar terms. Bond yields retreated once again as money moved back to the relative safety of Treasury debt. For more on recent trading activity, please read:

Unemployment Rate Edges Back Up As Hiring Slows
The closely watched monthly payrolls release came as a disappointment to many economists and investors alike. In all, U.S. managers hired just 54,000 people in May, far less than the 170,000 new jobs market participants were expecting — not to mention the 150,000 jobs that the economy needs to create every month just to keep up with the population. For more on the latest numbers and what they mean, please read:

The ‘Green Shoots’ Of Alternative Power Give Many Hope
Despite frustration elsewhere in the job market, the long-awaited “green” positions created by solar, wind, and other alternative energy sources finally seem to be materializing. In some areas progress still seems agonizingly slow, but at least some companies plan to boost their payrolls by 25% or more in the current year. For a look at the hype and substance in the “green” economy, please read:

Westside Investment Management Advisors are Registered Representative with and offer securities and advisory services through LPL Financial, Member FINRA/SIPC

BP smooths the way

June 10th, 2011

With the market in a pretty steep decline, I’ve been watching my British Petroleum (BP) stock carefully. One would hope that owning an oil company stock might be a slight hedge against a market decline. The range of price for this year is about $27 to $49.50. I bought 1000 shares when it was way down, during the big oil snafu, wrote calls against it, had it called away when it went up, then rebought some at $47.50. It’s now at $43, so this round I am down about $4,500 on the underlying stock. But I’ve collected over $7,000 in premiums:

In November I picked up $2,250 in call premium, writing the $50’s. Then as the stock went down I wrote the July 47.50’s and picked up another $2,000 or so, but bought those back recently for about $500 in order to write a leap.

A leap is a long-term option, usually extending over one year. The leap I wrote on BP goes out 18 months: it’s the Jan 2013, 50 call. I did this in order to capture another $3,400 in premium. The calls have put about $7,000 in my pocket, so I’m even at a $40 price. And if the stock goes below $40 I can buy back the leaps at a profit and write new calls or leaps at a lower price.

But $50 is where I want to sell it. So I’m confortable holding the stock another 18 months, and putting the premium income into other stocks. And for someone starting out now, buying the stock at $43 and selling the Jan 2013 leaps at a $50 strike price, and taking in about $3,500, is not a bad idea.


June 2nd, 2011

Some of you might recall that I bought the EFT VXX a short time ago. This is an index that moves based on volatility in the market.

I bought it at $27, which was historically very low, and sold the Sept 29 calls and took in $3,200. Since then the VXX has moved down every few days. It was just over $22 a day or two ago.

So here’s what I did: first, I bought back the 29 calls and paid about $1,600 to buy them back, for a profit of $1,600. Then a few days later, when the market went down (so the VXX went up to almost 23) I sold 10 calls of the Sept 25’s and took in $2,600.

Now I have $4,200 in my pocket, and my net worth on the long position has gone down $4,000, so I’m about even.

If the VXX goes up to 25 and is called away, I will lose $2,000 on the long position, but keep $4,200 in premiums, about a 10% annualized return. If the VXX stays below 25 between now and September, in September I will sell another call, probably at a 25 strike price, and take in more premium.