Ulli... The ETF Bully

All Eyes Are Focused on Fed and IMF Meetings; ETF Master Cutline List – Updated through 9/16/2011

Ulli Monday, 19 September 2011, 5:55 AM ETFs on the Cutline Contact

Dollar intervention efforts by global central bankers and jawboning about support for Greece proved to be the secret sauce to get the major market indexes moving higher during the past five trading days.

If all-around efforts continue to assist Europe, we might even see a break out the current 6 week trading range. However, there will be headline risk, depending on the outcome of the Fed’s 2-day meeting, as well as a speech by the Greek prime minister after the IMF/World Bank gathering.

It promises to be a week with a lot of potential fireworks. As one analyst said “there will be rallies like we had this week but until the trend changes, they should be sold into.”

In regards to the ETF Master Cutline, last week’s rally had some effect in that there are now 51 ETFs positioned above the line (up from 34), while 345 ETFs still hover below it and in bear market territory (down from 362).

Despite its pullback this week, gold ETFs still remain in the top spot followed by various government bond funds, which continue their moves to higher ground as lower interest rates support upward momentum.

Take a look the latest report:

Last Week In Review: ETF News And Blog Posts To 9/18/2011

Ulli Sunday, 18 September 2011, 8:40 AM Market Review 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 9/18/2011.

In a reversal from the prior week, the main event, the European debt saga, was put on the back burner thanks to plenty of jawboning by various politicians designed to appease the markets. It did work, and the major indexes staged a nice rebound rally, which ended at the top of the 6 week trading range.

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

This week, we covered the following:

Revisiting The Lost Decade

Ulli Sunday, 18 September 2011, 5:55 AM Market Review Contact

With the markets being stuck in a trading range over the past few weeks, it’s easy to forget to once in a while look at the big picture to see where we have been and where we might be going.

Doug Short produces some of the best charts in the business. He’s just updated the lost decade by comparing the S&P 500’s nominal return and the real total return, which is adjusted for inflation:

We’re now over eleven years beyond the S&P 500 2000 high. This little charting exercise gives credence to the frequent reference to a “lost decade” for investors. In nominal terms, the index is about 6.8 percent below where it was at the 2000 peak, but in real terms, it’s a disappointing 29.5 percent off the original investment. The chart also offers support for the wisdom of diversification across asset classes … and perhaps the value of active management during secular bear markets.

[Click on chart to enlarge]

ETF Leaders And Laggards – For The Week Ending 9/16/2011

Ulli Saturday, 17 September 2011, 5:55 AM 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:

From one week to the next, it can be feast or famine. That was the case with last week’s laggards, Germany and Spain, which took top billing this week, as Europe’s debt issues got swept under the carpet, while global markets shifted into rally mode.

Having the same ETFs going from laggards to leaders is clearly a sign of lack of major trend direction. While these types of reversals can make for a great trading environment, they are not conducive for the long-term investor, as you can get stopped out suddenly only to find yourself chasing another rebound.

No matter where you look, M-Indexes for most ETFs continue to be weak, which means clear upward momentum has not been established yet. It’s strictly a news driven market, especially from the European side of the Atlantic, where the odds of a black swan event are increasing daily; at least from my point of view.

It’s better to stand aside than try to participate in what I consider short-term moves that could reverse at a moment’s notice.

09-16-2011

Ulli Friday, 16 September 2011, 4:59 PM Newsletter Archives Contact

ETF/No Load Fund Tracker Newsletter For Friday, September 16, 2011

ETF/No Load Fund Tracker StatSheet

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

https://theetfbully.com/2011/09/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-9152011/

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Market Commentary

Friday, September 15, 2011

FROM SELL-OFF TO REBOUND

The prior week’s sell-off is now only visible in the rear view mirror, as the Major Market ETFs put the pedal to the metal and rallied for 5 straight days. As I have commented throughout the week, the upper end of the past months trading range for the S&P 500 (1,220) came into play today, as the index touched but did not break through that resistance point.

While worries about Europe were shelved for most of the week, which provided the fuel for this rebound, fears crept back into the market as a meeting of finance ministers in Poland showed no progress. The only agreement was that they agreed to meet again in October to determine whether Greek will receive the next bailout payment. The irony is that it’s not certain whether Greece will even need the money by then; their government may have run out of cash long before that…

I don’t know about you, but I am starting to suffer from bail out exhaustion. You don’t have to be an economist to figure out that Greece will default sooner or later. Why continue to pretend and extend? It’s far better for everyone involved to get it over with, stop the senseless bailouts and have world stock markets correct to whatever degree so that the rebuilding process can begin.

In any event, I don’t control these issues, so I have to deal with the fact that we have reached the upper end of the trading range. If it holds and breaks through that level, I will have to issue a domestic ‘Buy’ signal as the Domestic TTI (Trend Tracking Index) has remained on the bullish side of the trend line long enough. Here are today’s closing numbers:

Domestic TTI: +2.25% (last week +0.71%)
International TTI: -9.37% (last week -12.03%)

Since the news contains predominantly “all Europe all the time,” domestic issues can get lost in the shuffle. That was the case today, as the University of Michigan said that consumers’ economic outlook was at levels not seen since 1980. That’s not encouraging, especially since the consumer and his spending habits account for 2/3 of all economic activity.

With a little pick up in uncertainty today, gold finally managed a rally, but ended up closing down 2.4% for the week, while the equity ETFs gained handsomely, as the S&P 500 added 5.4%. Despite this week’s rebound, the major indexes remain in negative territory YTD.

From my mat, it appears that the rally was overdone and some sense of reality is bound to hit the markets, once this week’s euphoria about Greece having been saved wears off. Again, none of the issues that are of grave concern to the EU have been resolved. They have merely been pushed aside, and the markets ended up playing along.

I am sure we will be inundated with the latest and greatest Greek and other rescue attempts next week, but I am curious as to not if but when the fact that it’s all an exercise in futility will finally matter to the markets.

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 Mike:

Q: Ulli: Thank you for the great service you offer on these free portfolios…

How can one start, the # 7 PRPFX equivalent portfolio? Would appreciate very much your general guidance.

A: Mike: There is not much I can recommend since you are not a client, and I don’t know your particular circumstances. You need to invest according to your risk tolerance. I’ve just done a video on that; it’s not official yet, but you can preview it here:

http://www.youtube.com/watch?v=69gNJ56EOGQ

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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/

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

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