ETF/No Load Fund Tracker Newsletter For Friday, January 10, 2014

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Market Commentary

Friday, January 10, 2014


Fri pic

[Chart courtesy of]

1. Moving The Markets

U.S. stocks ended Friday mixed after the U.S. December jobs report disappointed though losses were limited and trading remained choppy. However, for the week, most of the indices gained, as the above chart shows.

The dollar slumped against most major currencies on Friday after official data revealed the U.S. economy picked some steam, which created concerns the Federal Reserve may not take its time dismantling stimulus programs.

In the end, utility companies remain poised to benefit from severe cold as more Americans use electricity for heating, leading to higher bills. Though there are several ETFs in this space, the two ultra-popular Utilities Select Sector SPDR (XLU) and Vanguard Utilities ETF (VPU) might be good options, although both remain on the bearish side of their respective trend line.

The top ETFs this week were Market Vectors Gold Miners ETF (GDX) 8%, the iShares MSCI Poland ETF (EPOL), which closed at a new two-year high after gaining 3.8 percent this week, the Direxion Daily Gold Miners Bull 3x ETF (NUGT) and the Global X Uranium ETF (URA) 6.3%.

Our 10 ETFs in the Spotlight made some recovery attempt as the indexes headed slightly higher for the week with 3 out of 10 now showing positive numbers YTD.

2. ETFs in the Spotlight

In case you missed the announcement and description of this section, you can read it here again.

It features 10 broadly diversified ETFs from my HighVolume list as posted every Monday. Furthermore, they are screened for the lowest MaxDD% number meaning they have been showing better resistance to temporary sell offs than all others over the past year.

In other words, none of them ever triggered their 7.5% sell stop level during this time period, which included a variety of severe market pullbacks but no move into outright bear market territory.

Here are the 10 candidates:


All of them are in “buy” mode meaning their prices are above their respective long term trend lines by the percentage indicated (%M/A).

Now let’s look at the MaxDD% column and review the ETF with the lowest drawdown as an example. As you can see, that would be XLY with the lowest MaxDD% number of -5.73%, which occurred on 11/15/2012.

The recent sell off in the month of June did not affect XLY at all as its “worst” MaxDD% of -5.73% still stands since the November 2012 sell off.

A quick glance at the last column showing the date of occurrences confirms that five of these ETFs had their worst drawdown in November 2012, while the other five were affected by the June 2013 swoon, however, none of them dipped below their -7.5% sell stop.

Year to date, here’s how the above candidates have fared so far:


3. Domestic Trend Tracking Indexes (TTIs)

Looking at the big picture, our Trend Tracking Indexes (TTIs) recovered from last week’s slippage and remain above their long term trend lines by the following percentages:

Domestic TTI: +4.33% (last Friday +4.09%)

International TTI: +6.83% (last Friday +6.20%)

Have a great week.


Disclosure: I am obliged to inform you that I, as well as advisory clients of mine, own some of these listed ETFs. Furthermore, they do not represent a specific investment recommendation for you, they merely show which ETFs from the universe I track are falling within the guidelines specified.



All Reader Q & A’s are listed at our web site!
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A note from reader Larry:

Q: Ulli:

I am a little confused about the buy back in as described in the paragraph below from your e-book:

“b. If the price of SPY was above its 39-week SMA at the time we got stopped out, the new Buy point would occur once the old basis for figuring out the sell stop has been taken out. Once that happens, we buy the following day at the close.”

Please clarify.  I take it that if SPY stopped out above the 39 week SMA at a price of say $130.95 and the SPY never fell below the 39 week SMA and resumed its uptrend that one would buy back at a price of $130.95; is that correct and if not please help me understand.

A: Larry: As I described in the e-book, for those who strictly follow SPY, there are 2 exit strategies. You mentioned 1 of them. If SPY did NOT break below its SMA, than the old basis, or old high, that was used to figure the trailing sell stop to begin with, should be used to re-enter.

Let’s take the current number for SPY. The current price is 183.52, the current High point is at 184.69 and the SMA is at 169.54. Say, the price declines off its high by 7.5% to 170.84; that would cause a sell signal. Let’s say, it was executed at 170, which is still above the SMA. Let’s assume the market resumes its upward trend without breaking the trend line. So, the new entry point is a break through the old high of 184.69, which would confirm a resumption of the upward trend.

Keep in mind that this is not an exact science, but merely a way to establish some kind of exit strategy in order to avoid major portfolio disaster.



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