Major Market ETFs Surge On Buyout

Ulli Market Commentary Contact

The markets stayed in rally mode for the third day in a row, supported by rises in Asia and Europe, along with the announcement by Google to buy Motorola Mobility. The major Market ETFs have now recovered all of their losses since the U.S. debt downgrade on August 5.

Despite this bit of euphoria, the problems that prompted the downturn have not gone away yet. A domestic recession is still the cards, and Europe’s banking system is in dire straits.

Technically, the markets remain in correction mode meaning the major indexes are still off their April 29 peaks by more than 10%. Maybe that explains that today’s volume was very light suggesting that there is not much conviction behind this up move.

Our Trend Tracking Indexes (TTIs) showed improvement as well and are positioned relative to their long-term trend lines as follows:

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ETF Master Cutline List – Updated Through 8/12/2011

Ulli ETFs on the Cutline Contact

After another wild week in the markets, with a downward bias, the number of ETFs residing above the cutline has been reduced again, which is no surprise. At this point, there are only 36 ETFs positioned in Bull Market territory, above the Cutline, while 360 ETFs are stuck on the Bear Market side.

Leading the pack are the precious metals, followed by long-term/intermediate government bonds, indicating the flight to safety is still on.

Take a look at the latest report:

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Last Week In Review: ETF News And Blog Posts To 8/14/2011

Ulli ETF News Contact

In case you missed it, here’s a summary of the ETF topics and market reviews I posted to my blog during the week ending on 8/14/2011.

More breathtaking downside moves followed by just as breathtaking recoveries had investors on edge—not just domestically but globally as well. Because of the rebounds, this week’s losses were somewhat modest, considering what could have been. The S&P 500 gave back 1.7%.

I believe that these wide market swings are far from being over, although we could see a short rest period before the European debt crisis shifts into the next gear.

In any event, if you followed my sell stops rules, you should not have any equity exposure at this time with the exception of a couple of sector/country ETFs or hedged positions.

This week, we covered the following:

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Reader Q&As: I Missed The Domestic Sell Signal – What Do I Do With My ETFs? When Do I Rebalance the PRPFX Hedge?

Ulli Reader feedback Contact

With the wild market behavior of the past few weeks, it’s no surprise that many readers having written in with a variety of questions. Today, I want to address two of them, which were most often asked:

I am newly implementing your stop loss strategy.  I regrettably have missed the 7% mark and have let my losses become larger due to the recent market volatility, and my own unwatchfulness. I have exited some of my positions. 

I was wondering what you would recommend now for the rest of my holdings. Should I sell at a larger loss, and protect any remaining profits, or should I wait for a bounce in the markets before exiting? Or, should I wait at this point for an all out domestic sell order?  I am sure that from here on out I will keep closer stop losses!  Thanks so much for your guidance.

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ETF Leaders And Laggards – For The Week Ending 8/12/2011

Ulli ETF Leaders & Laggards Contact

Here is a quick ETF review of the past week’s winners and losers from my High Volume ETF Master list:

Major Market ETFs got spanked again, but to a lesser degree than the prior week. We had a change in some of the leaders and laggards.

As was no surprise, the flight to safety continued making GLD, GDX and TLT the top gainers for the past five trading days. On the downside, some country ETFs got hammered, but ECH resisted, as less risky investments, and those considered a currency equivalent (gold), were drawing funds away from equities.

Domestically, we are still bouncing around the long-term trend line, a condition which is sure to be temporary, until a breakout occurs. The open question is will it be deeper into bear market territory or back into the bullish camp.

Both options are possible but, looking at the overall global landscape, a downside break is more likely at least from the facts as they are available right now. There will always be bounces, the question is whether they have legs or not. My guess is that we eventually will break further into bear territory; if not, I will adjust my positions based on the changes in momentum.

Disclosure: Holdings in GLD, TLT

08-12-2011

Ulli Newsletter Archives Contact

ETF/No Load Fund Tracker Newsletter For Friday, August 12, 2011

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-8112011/

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Market Commentary

Friday, August 12, 2011

BULLS MANAGE DAMAGE CONTROL

In a way, the bulls lucked out this week, as the rebounds of the past couple of days wiped out some sharp losses, which resulted in the benchmark S&P 500 ‘only’ giving back 1.7%.

Retail sales figures suggested that consumers are still spending, which proved to be the catalyst for today’s continuation to the upside. That was somewhat surprising and contradictory as the consumer sentiment index fell to its lowest level since 1980 indicating that consumer are not very optimistic. No surprise there, as more opinions abound that another recession is probable.

Despite the two up days, many challenges remain. Suspiciously absent from the news menu were more negative reports from the European debt crisis, which could shift into the next higher gear at anytime and roil world markets.

Our Trend Tracking Indexes (TTIs) diverged and are showing the following positions relative to their long-term trend lines:

Domestic TTI: +0.82% (last week -0.06%)
International TTI: -9.27% (last week -8.20%)

As you can see, the international TTI has sunk further into bear market territory, while its domestic cousin has again started nibbling on the plus side. However, the widely followed Golden Cross/Death Cross just turned negative by -0.19%. If you are not familiar with this combo, you can read about it here.

As I posted before, I will not issue a new Buy signal for that arena until the trend line has not only been clearly pierced to the upside, but has also shown me some staying power. The reason is to avoid a potential whipsaw signal.

The S&P 500 remains stuck below its widely followed 200-day M/A by -8.31% indicating that a lot more momentum to the upside is needed before this rebound can be considered a return to the bullish territory.

Strong headwinds remain, and it is a wide open guess as to whether volatility will slow down in the near future. Our PRPFX hedge is still on the positive side and the current status is as follows:

I will hold on to this hedged position for the time being.

Next week, we’ll be looking at a bunch of housing reports along with Industrial Production, PPI, CPI, Initial Claims and Leading Indicators.

Being on the conservative side with your investments, either out of the market or hedged, is a wise course of action, unless you have a reckless killer gambling instinct, which you needed to comfortably make it through a week like the past one.

Have a great week.

Ulli…

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READER Q & A FOR THE WEEK

All Reader Q & A’s are listed at our web site!
Check it out at:

http://www.successful-investment.com/q&a.php

A note from reader Don:

Q: Ulli: Do you think it would be o.k. to get into the market now with a purchase of PRPFX and the 50% hedge with SH the following day when the fund settles?  I would think since the position is hedged, it wouldn’t make too much difference when the positions are established.

Right of wrong?

Thanks for your valuable input.

A: Don: Say, you have an order in to buy PRPFX today, then, ideally, you want to buy SH at the close today to have the proper ratio to start with. It’s usually not exactly possible, but you can come close if you buy within 10 minutes of the close.

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https://theetfbully.com/personal-investment-management/

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Back issues of the ETF/No Load Fund Tracker are available on the web at:

https://theetfbully.com/newsletter-archives/