ETF/No Load Fund Tracker Newsletter For Friday, August 19, 2011

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ETF/No Load Fund Tracker StatSheet

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THE LINK TO OUR CURRENT ETF/MUTUAL FUND STATSHEET IS:

https://theetfbully.com/2011/08/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-8182011/

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Market Commentary

Friday, August 19, 2011

FORECLOSING ON EQUITIES

The bullish start to this week has long been forgotten, as the major market ETFs got clobbered at the tune of -4.66% for the S&P 500. For the month, this widely followed index is now down by a mind boggling -13.00%, while our core holding, PRPFX, managed to slip only by a scant -1.43%.

Recession fears gripped Wall Street, and rightfully so, as stocks plunged sharply on Thursday, which was followed up by more bearish superiority on Friday. Domestic economic data showed a stalling economy, not just here but in Europe’s main engine, Germany, as well. The debt crisis is far from being contained and worries persist that primarily European banks will be adversely affected once the first domino starts to tumble.

Our Domestic Trend Tracking Indexes (TTIs) slithered further south and have reached the following positions below their long-term trend lines:

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Weekly StatSheet For The ETF/No Load Fund Tracker Newsletter – Updated Through 8/18/2011

Ulli Uncategorized Contact

ETF/Mutual Fund Data updated through Thursday, August 18, 2011

If you are not familiar with some of the terminology used, please see the Glossary of Terms.

1. DOMESTIC EQUITY MUTUAL FUNDS/ETFs: SELL — since 8/9/2011

This past week, the domestic TTI broke through its long-term trend line generating a Sell for this area effective 8/9/2011. Over the past few days, we’ve seen the TTI hovering slightly below and above this dividing line between bullish and bearish territory. I will not issue a new Buy signal until this index has clearly pierced the trend line to the upside and has remained there for a few trading days.

As of today, our Trend Tracking Index (TTI—green line in above chart) has broken back below its long term trend line (red) by -0.34%.

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Misery For Equity ETFs; PRPFX Hedge Gains

Ulli Market Commentary Contact

The markets took another nosedive today as Morgan Stanley warned about a global recession, which caused 10-year Treasury yields to drop below 2% as the flight to safety continued.

As a reader of this blog, the dreaded “R” word (as in ‘Recession,’ not in ‘Recovery’) should be a familiar tune, as I have commented about this very possibility for quite some time.

The sovereign debt crisis, along with weak domestic economic data combined forces to push all major market ETFs substantially lower, as the chart above shows (courtesy of MarketWatch.com).

The Trend Tracking Indexes (TTIs) joined the slide and have reached the following points in regards to their long-term trend lines:

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Market Review – High Volume ETFs On The Cutline – Updated Through 8/17/2011

Ulli ETFs on the Cutline Contact

While the rebound of the past 5 trading days provided welcome relief to those investors who kept their equity ETF positions through the recent market beating, the effect on the cutline has been negligible.

That’s a sign that the recent rebound came from a much oversold position with short covering playing a big role by providing the ammunition needed to push the bearish forces back, at least for the time being.

Tech weakness contributed to a trading day yesterday that started out well to the upside but ended just about unchanged showing lack of conviction in the face of a continuous barrage of reports showing not just domestic but also global weakness.

It looks to me that Wall Street is still counting on the Fed of pulling out another rabbit from the hat via a possible QE-3. Once that sentiment meets reallity, downside momentum may pick up again. I believe that it’s just matter of when not if.

The expanded High Volume ETF Cutline report includes all ETFs above and below the cutline (trend line). To clarify, High Volume (HV) ETFs are defined as those with an average daily volume of $10 million or higher.

These ETFs are generated from my selected list of some 90 that I use in my advisor practice. It cuts out the “noise,” which simply means it eliminates those ETFs that I would never buy because of their volume limitations.

The current report supports my theory of continued weakness as only 16 ETFs are hovering above the cutline, while 74 are stuck in bear market territory.

Take a look at the most recent table:

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7 ETF Model Portfolios You Can Use – Updated through 8/16/2011

Ulli Model ETF Portfolios Contact

Sharp market drops followed by stunning recoveries provided a casino like atmosphere on Wall Street during the past week.

We initiated a hedge for our Trend Tracking Portfolio (#1). Unfortunately, the bulls showed some life again during the past 5 trading days, after the bears were dominant, which proved to be drag on our hedged position. Consequently, this particular portfolio is now positioned in the middle of the pack.

Leading, since it had been added recently, is Portfolio #7, which represents the ETF equivalent of PRPFX. It’s up YTD by a remarkable +10.68%, far ahead of all other models. Since I am tracking it daily, I can tell you that it holds up better during downturns in the market, but it lags somewhat when the upside comes into play.

Take a look at the details:

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Weak Economic News Drag Down Equity ETFs

Ulli Market Commentary Contact

Weak economic news proved to be a drag on equity ETFs as Europe’s main engine, Germany, just about stalled in regards to second quarter GDP. Domestically, housing starts in July were nothing to brag about.

German and French leaders proposed to better coordinate financial planning and to enact a tax on financial transactions. Lovely; I wonder if there ever will be a solution forthcoming that involves cutting waste and not raising taxes. Go figure…

In any event, our Trend Tracking Indexes (TTIs) ended up in the following positions:

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