Mutual Funds On The Cutline – Updated as of 6/20/2011

Ulli Mutual Funds On The Cutline 2 Comments

Following our International Sell signal last week, more foreign mutual funds succumbed to selling pressure, despite yesterday’s bounce, and have slipped into bear market territory. Some of the big names from last week are:

Fidelity International Diversified (FDIVX), which fell from +11 to below the -20 position, while the Vanguard International Stock Index (VGTSX) followed suit by moving from +10 to below the -20 spot.

Dropping in from a level above the +20 listing was T. Rowe Price International (TRIGX), which settled at -1.

It confirms my current view that broadly diversified international funds/ETFs are not the place to be at this time. Take a look at the report and note the other contenders that slid below the cutline:

[Click on table to enlarge, copy and print]

As I mentioned in Monday’s ETF Cutline report, the number to watch was the S&P 500’s 200-day moving average (around 1,267). The index dropped to that number yesterday but buyers stepped in to push the market off that level.

While that is a nice trampoline effect, it remains to be seen if this bounce can carry the markets higher. I doubt that this is anything more than a temporary attempt as news was fairly benign. Watch that number closely, as a severe breach to the downside is certain to invite more bears to the party.

Quick reference to recent issues:

6/13/11 issue

6/6/11 issue

5/30/11 issue

5/23/11 issue

5/16/11 issue

5/9/11 issue

5/2/11 issue

4/25/11 issue

4/18/11 issue

4/11/11 issue

Disclosure: No holdings

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Comments 2

  1. Ulli,
    You have stated that you would not deploy new money into equities at this time. I fully agree.
    However, should the Domestic TTI hold at current level and then start to show signs of recovery, how will you go about reinvesting recently stopped out $$ that was previously invested in US stocks. Will you be aggressive and invest at X% above the Domestic TTI or simply wait to see if recent highs (most probably occurred in late April 2011) can be taken out?
    Thanks, Paul

  2. Paul,

    Yes, before deploying new ETFs, I like to see an improvement in momentum numbers first should the markets hold and move up from these levels. To be sure that upward momentum has resumed, a good re-entry point is the basis from which the sell stops have been calculated. While that is very conservative, it’s the number I will use for the model portfolios.


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