ETFs On The Cutline – Updated through 6/17/2011

Ulli ETFs on the Cutline 2 Comments

With the International Trend Tracking Index (TTI) having signaled a ‘Sell’ last Wednesday, can the domestic TTI be far behind?

Judging by the action around the current ETF Cutline report, only a substantial rebound with legs may be able to stem the slide and reinstate upward momentum.

Since the last report, several additional major indexes have slid below their long term trend line, even though a week ago they were still solidly entrenched in bullish territory. Holding its ground, but slipping towards the cutline, was the Global S&P 100 (IOO), which dropped from a +16 to a +13 position, while the Russell 2000 retreated to -2 from +7.

Dropping in from a level above the listed +20 ETFs, were the following:

IWZ (Russell 3000 Growth) +11

IWF (Russell 1000 Growth) +9

TMW (Wilshire 5000) -3

SPY (S&P 500) -8

All of the above, except SPY, have triggered their 7% trailing sell stop points and should be sold. As the table shows, these 4 ETFs are tightly hovering around the cutline by less than ¼%. Take a look at the table, and then I’ll tell you the magic number to watch for this coming week:

[Click on table to enlarge, copy and print]

Downward momentum has clearly increased, and the magic number to watch for is the S&P 500’s 200-day moving average (around 1,267). Currently, the index hovers +0.36% above it. If that level is clearly pierced to the downside, watch out, selling could easily accelerate and push the domestic TTI into bear market territory as well.

Be sure to tune into the blog for the latest updates.

Reference: “How do I use the ETF Cutline Table to make a Buy decision

Previous posts:

ETF Cutline Post as of 6/10/2011

ETF Cutline Post as of 6/3/2011

ETF Cutline Post as of 5/27/2011

ETF Cutline Post as of 5/20/2011

ETF Cutline Post as of 5/13/2011

ETF Cutline Post as of 5/6/2011

ETF Cutline Post as of 4/29/2011

ETF Cutline Post as of 4/21/2011

ETF Cutline Post as of 4/15/2011

ETF Cutline Post as of 4/8/2011

ETF Cutline Post as of 4/4/2011

Disclosure: Holdings in SPY

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Comments 2

  1. Ulli,
    I am a recent retiree with moderate risk tendancies when it comes to investing. If I were a buy and hold investor, I would be comfortable holding a 60% equity /40% fixed income portfolio.
    However, assuming one follows a trend following program with a predetermined sell stop process in place, I’m thinking it may be more appropriate to take equities to 80% when market trends dictate.
    Do you think I am off base in my thinking?

    Thanks, Paul

  2. Paul,

    Yes, that thinking goes along with my model ETF portfolios. But more important is the fact that you have a safety net build in to offer you some portfolio protection when the markets turn south in a big way.


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