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:
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.
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Disclosure: Holdings in SPYContact Ulli