A New Uncertainty Surfaces – Expanded ETF Master Cutline List – Updated through 8/5/2011

Ulli ETFs on the Cutline Contact

Every so often I talk about known and unknown uncertainties, and the power they have to derail markets, especially in today’s volatile environment.

The latest uncertainty, which became known after the markets closed on Friday, was S&P’s downgrade of U.S. debt from its sterling AAA rating to AA+. While the possibility of a downgrade was not breaking news, the sudden timing of it sure was.

Most analysts I have read are just uncertain about market reaction as you may be. The common thread was that there might be some increased volatility for a couple of days or so until things settle down. I would agree with that.

More downside action will most certainly push our Domestic TTI into bear market territory, as last week’s weakness may continue for the time being. The sharp downturn changed the composition of our ETF Master Cutline list in that there are currently only 38 ETFs listed above the line (down from 188), while the bearish side now shows 358 ETFs (up from 208).

Take a look at the latest report:

Read More

Last Week In Review: ETF News And Blog Posts To 8/7/2011

Ulli ETF News Contact

In case you missed it, here’s a summary of the ETF topics that I posted to my blog during the week ending on 8/7/2011.

Another sharp downside week pushed the major domestic indexes to the edge of slipping into bear market territory, according to my Domestic TTI.

After Friday’s close, Standard & Poor’s announced the downgrade of U.S. debt from AAA to AA+ with a questionable outlook. My guess is that market reaction will be very volatile for a day or so until that news and possible implications have sunk in. On the other hand, maybe some of this news has already been priced in, as it was expected, but the timing of it was the big unknown.

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.

This week, we covered the following:

Read More

Thoughts On Hedging The Permanent Portfolio Fund (PRPFX)

Ulli ETF Hedge Contact

As you know from my Wednesday ETF Model Portfolio posts, my preference in my advisor practice is the use of portfolio #1, which includes a core holding in PRPFX, the only mutual fund I currently use and advocate.

During the recent market upheaval, PRPFX has held up extremely well and therefore has given us the type of portfolio stability I was looking for.

But is it a fund for all times and all scenarios?

If you look back to 2008, you will notice that PRPFX declined as well, but not nearly to the extent that the broad market did as measured by the S&P 500 (SPY). The 5-year chart below clearly demonstrates not only this point, but also underscores again the wisdom and benefit that limiting downside risk has its long-term rewards:

Read More

ETF Leaders And Laggards – For The Week Ending 8/5/2011

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:

Some of last week’s contenders remained in the top spots, as a flight to safety continued to be the name of the game during the market drubbing of the past 5 trading days.

We have now knifed through major support levels, and it is wide open as to which market direction offers the path of least resistance. Should more negative news regarding debt issues and concerns come out of Europe, this current bull will die a fast death by slicing through the trend line of the domestic TTI, which means, just like in the international arena, we will have re-entered bear market territory.

Be sure to tune into tomorrow’s post, when I will discuss my hedging strategy for the PRPFX fund, should the bearish scenario turn out to be the dominant one.

Disclosure: Holdings in GLD, TLT, FXF

08-05-2011

Ulli Newsletter Archives Contact

ETF/No Load Fund Tracker For Friday, August 5, 2011

ETF/No Load Fund Tracker StatSheet

————————————————————-

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

https://theetfbully.com/2011/08/weekly-statsheet-for-the-etfno-load-fund-tracker-updated-through-842011/

————————————————————

Market Commentary

Friday, August 5, 2011

SELL-OFF TSUNAMI

Volatility continued today as the Dow see-sawed from a plus 171 points to a minus 245 points, but ended up settling at +61.

The other major market ETFs followed a similar pattern and, after it was all said and done, the most widely tracked barometer, the S&P 500, had lost -7.2% for the week and is now down -4.6% YTD. For comparison, our core holding, PRPFX, gave back a more modest -2.48% but is up +5.61% YTD.

There was virtually no place to hide as the Dow had its worst week since March 2009, and many investors are certainly glad that these past 5 trading days are over.

The jobs report was better than feared, which helped the markets in the early going. However, it was certainly not a stunner, quite the contrary, and not strong enough to overcome general uneasiness about the state of the economy and the European crisis.

Our Trend Tracking Indexes (TTIs) moved lower and remain in the following positions relative to their respective long-term trend lines:

Domestic TTI: -0.06% (last week +3.04%)
International TTI: -8.20% (last week -1.17%)

As you can see, the international TTI has really accelerated into bear market territory since last Friday, while its domestic cousin just slightly dipped into it by a meager -0.06% after the close today. This drop below the line is not enough to declare the current bull market in domestic equities from being over. I like to see a clear piercing to the downside before declaring this bull dead.

Next week, more economic data are on the menu, which might give some guidance as to the worsening or improving of the current economic status. I will watch the domestic TTI closely and will post any important developments to the blog.

I sure hope that you heeded my constant reminders to execute your trailing sell stops when they get triggered. These are the times you need to be disciplined, especially when world markets are panicking. Hence my constant reminder for you to always prepare your exit strategy ahead of time, during calmness in the market, so you don’t stress when the heat is on.

Have a great week.

Ulli…

————————————————————-

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 Dick:

Q: Ulli: Thanks for posting your ETF approach to PRPFX. Have you ever considered the following?

PRPFX is a modified version of Harry Browne’s “Permanent Portfolio.”

People who follow Harry’s approach hang out at:

http://www.gyroscopicinvesting.com/forum/index.php

They advocate 4 ETF’s, 25% each:

IAU, VTI, TLT, SHY or a Treasury $ MKT account

Rather than a stop loss, they use a rebalancing approach based on a band (usually + or – 10%, to take from one that’s grown and add to rebalance with one that’s down.)

If you have thought of Harry’s original approach, I would appreciate any comments you might have.
A: Dick: Yes, I read Harry’s book some time ago and agree with the composition he proposes. I don’t agree that PRPFX can always be held. Sometimes you just have to get out of it, or hedge it; a good example would have been 2008. I will talk about the hedging part in a post this coming Sunday.

I have tried the 4 ETF combinations, and they have not worked very well, which is why I came up with my own version. Sometimes the copy is better than the original, at least for this moment in time.

———————————————————-

WOULD YOU LIKE TO HAVE YOUR INVESTMENTS PROFESSIONALLY MANAGED?

Do you have the time to follow our investment plans yourself? If you are a busy professional who would like to have his portfolio managed using our methodology, please contact me directly or get more details at:

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

———————————————————

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

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

ETF/No Load Fund Tracker Newsletter For Friday, August 5, 2011

Ulli ETF Tracker Contact

ETF/No Load Fund Tracker StatSheet

————————————————————-

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

https://theetfbully.com/2011/08/weekly-statsheet-for-the-etfno-load-fund-tracker-updated-through-842011/

————————————————————

Market Commentary

Friday, August 5, 2011

SELL-OFF TSUNAMI

Volatility continued today as the Dow see-sawed from a plus 171 points to a minus 245 points, but ended up settling at +61.

The other major market ETFs followed a similar pattern and, after it was all said and done, the most widely tracked barometer, the S&P 500, had lost -7.2% for the week and is now down -4.6% YTD. For comparison, our core holding, PRPFX, gave back a more modest -2.48% but is up +5.61% YTD.

There was virtually no place to hide as the Dow had its worst week since March 2009, and many investors are certainly glad that these past 5 trading days are over.

The jobs report was better than feared, which helped the markets in the early going. However, it was certainly not a stunner, quite the contrary, and not strong enough to overcome general uneasiness about the state of the economy and the European crisis.

Our Trend Tracking Indexes (TTIs) moved lower and remain in the following positions relative to their respective long-term trend lines:

Read More