If you were still fully invested in equity ETFs this morning, after the markets opened, this was indeed a very long day for you.
The indexes slipped right out of the starting blocks and never looked back, as relentless selling pushed the major market ETFs to their worst one-day loss since December 2008.
Worries persisted that the U.S. economy will slide back into a recession which, to my way of thinking, is pretty much a sure thing. Concerns that the Fed will not engage in Quantitative Easing to boost the economy again, helped the bearish cause. Adding more uncertainty was the worsening European debt crisis, which seems to spread despite the various rescue attempts.
All this added up to a perfect storm for the bearish crowd.
While the markets have now entered officially correction mode (more than 10% off the top made on April 29, 2011), our Domestic TTI (Trend Tracking Index), has remained above its trend line, but barely.
Here are today’s numbers:
Domestic TTI: +0.57%
International TTI: -8.41%
S&P 500’s 200 day M/A: -6.60%
Even though our domestic TTI is still hovering in bullish territory, if you followed my recommend trailing sell stop discipline, you should no longer be holding any domestic equity funds/ETFs anyway.
All eyes are now feasted on tomorrow’s jobs report. If the numbers turn out really bad, I have to wonder if some early “leakage” contributed to today’s ferocious selloff.
Our core holding PRPFX declined a more modest 1.96% during today’s drubbing, while its ETF equivalent gave back 1.8%.
Be sure to look for this Sunday’s post, when I review the possibility of hedging PRPFX, when the time comes, as opposed to selling it. Stay tuned!
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Comments 8
I lucked out and got 40% out last Thursday and locked in some gains and took another 40% out on Tuesday based upon all indexes nearing the 200 day MA. Momentum was not slowing so I had to get out.
Today the S+P blew thru substantial support at around 1225 and just drifted downward. I saw no panic selling it just drifted (swiftly) downward.
I believe this drop is not over. My target on the S+P is between 1100-1120 at the bottom. We definitely need to re-evaluate the situation then, but there appears to be no catalyst for any economic growth. We may well blow thru the 1100 level on the s+p and who knows how far we go down.
Hi Ulli,
Over the years, I have noticed that your Domestic TTI moves up/down at a significantly slower pace than the Total US Stock Market. Is that by design?
Thanks,
Paul
Ulli: Thanks for your efforts to give this special report. What is the advantage of hedging PRPFX as opposed to selling it? Are we not committing more capital to hedge PRPFX as opposed to selling it? You must be having indepth insights into why you plan to do it. Can you please elaborate for our benefit. Thanks
JC,
I can’t argue with your logic. I fail to see an economic catalyst as well.
Ulli…
Paul,
Yes, it rends to move a little slower from time to time. The main reason is that it contains an interest rate component, which reduces the volatility of the index during times of lower rates and increases it during times of higher rates.
Ulli…
Anon,
Yes, I personally have reasons to hedge it rather than to sell. For one, it offers me a profit opportunity in a bad market and two, in my advisor practice, we have such a large holding that I simply can’t sell it all without violating mutual fund trading restrictions. You as an individual should liquidate it, if you are more comfortable. I will be talking about hedging PRPFX in this Sunday’s post.
Ulli…
Uli,what is prpfx ‘ equivelent etf symbol? Thank you & is the makeup the same?
Ike,
Please see last Sunday’s post for the introduction:
https://theetfbully.com/2011/07/reviewing-the-etf-equivalent-of-prpfx/
Ulli…