The major market ETFs took it on the chin today in what appears to be a continuation of last week’s selloff. The S&P 500 ended up closing below its trading band that I discussed last Tuesday. I featured the S&P 500 chart below, which now clearly shows the downside breakout:
Today’s weakness pushed stocks to their lowest closing levels in a year with the culprits being the usual suspects. The situation in Greece is getting more worrisome by the day, while recession fears in the U.S. continue to linger, although I happen to believe that we’re already in it.
At the same time, worries persist as to the fallout when not if Greece defaults. How many banks are overleveraged with foreign debt so that the slightest haircut will send them into receivership?
Domestically, auto sales were fairly strong and U.S. manufacturing is still growing but a lesser rate indicating that the economy has not done its best waterfall imitation yet.
In regards to the markets, the numbers confirm that we are entrenched in bear market territory.
Our Domestic TTI (Trend Tracking Index) slipped further south to a reading of -2.00%, while its international cousin hovers below its respective trend line by -15.32%.
Even the major indexes have gone way south as the readings below their 200-day moving averages indicate:
Dow Jones Industrials: -11.08%
Dow Jones Transportation: -20.26%
S&P 500: -14.13%
And the widely watched Death Cross sits at -6.53%.
At this time, there is no reason to hold any equity ETFs/mutual funds. This should be your position as well, if you follow my ideas in this blog.
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Comments 2
Considering the slide momentum, why not take positions in inverse funds such as SH or DOG?
Lew,
If you are the aggressive type, you can. Most investor’s with a moderate risk tolerance are better staying on the sidelines and/or look for some exposure in selected bond positions.
Ulli…