Saturday’s video featuring Bob Prechter supported the view that a potential top similar to 2007 has been formed. For an opposing view, take a look at “Bulls still fit to fight:”

Stephen L. McKee, editor of the No-Load Mutual Fund Selection & Timing Newsletter, says that while investors may be worried about a market correction, they should be looking for bargains.

“Even though the market has come a long way,” McKee said, “we’re still only at the beginning of its move. If it continues, compared to previous markets, we should go another year or year and a half and go up another 50% … based on other bull-market moves.”

There you have it; a totally bullish opinion. Only time will tell who will be right. Personally, I would lean more towards Prechter’s viewpoint. However, in regards to investing any forecast is meaningless, and my preference is to look at the actual trends, since only they represent the reality of the market place.

Right now, we are still in bullish territory, have our trailing sell stops established and will continue to hold on until the market tells us otherwise. In my book, that beats forecasting anytime.

I will be traveling this weekend and will not have an opportunity to write the usual Sunday Musings. Regular posting will resume on Monday. Stay tuned.

Bob Prechter appeared on CNBC a few days ago and discussed seeing a market top similar to the one in 2007. Take a look at the video:

While I believe that the Elliott Wave Theory has merit, it is not a very good timing indicator. Some of Bob’s previous forecasts based on his E-wave analysis have been correct, but were made way early. Given what has happened in the market in 2008, an early exit certainly was better than a late one or none at all.

With the S&P; now having retraced recent gains back to the November level, a trend reversal is a distinct possibility. So far, only sell stops in Asian, Chinese and international ETFs/mutual funds have been triggered, but many more will follow if the markets give back another 2%.

Don’t make any emotional decisions; simply let the market tell you when it’s time to get out.

My latest No Load Fund/ETF Tracker has been posted at:

http://www.successful-investment.com/newsletter-archive.php

Continued downside momentum pulled the major indexes lower. It’s interesting to note that the international TTI has now passed the domestic TTI by moving closer to its respective trend line and a potential sell signal.

Our Trend Tracking Index (TTI) for domestic funds/ETFs has now crossed its trend line (red) to the upside by +3.13% keeping the current buy signal intact. The effective date was June 3, 2009.



The international index has now broken above its long-term trend line by +2.97%. A Buy signal was triggered effective May 11, 2009. We are holding our positions subject to a trailing stop loss.

Reader Russ had a great suggestion and commented as follows:

I enjoy your columns and blogs and have benefitted from your recommendations to set firm sell points. My question/request is on finding information on a specific fund or ETF within the stat sheets.

It would seem very helpful if there would be a search feature that one could enter the name or symbols for a fund/ETF to see if it is in the stat sheet rather than scanning through all the pages to see if it is there. Just a suggestion to speed things up.

This would indeed be helpful for many readers, especially as the offerings of ETFs increase. Since the StatSheet files are in PDF format, I am not aware whether or not you can actually search through them.

I found a program on the internet called Powergrep that will actually do that and a lot more. I have not tried it so I can’t vouch for its accuracy, but they offer a free trial.

If you are aware of an easy way to search through PDF files, please share it with me.

The WSJ featured a story on the discrepancies between an ETF’s performance and the underlying index it is supposed to track:

True believers in index funds are eyeing a problem churned up during the market’s turbulent passage over the past two years—tracking error.

One factor here is cost. The Vanguard ETF charges much lower yearly fees than the iShares fund: 0.27% of assets compared to 0.72%. That savings is passed directly to the investor and boosts returns.

While I am aware of these discrepancies, they will have no bearing as to whether I take a position in either fund once the upward trend dictates that I do so. However, my point here is a different one.

A reader, who had seen this article as well, mentioned in passing that VWO, having lost 53% in 2008, certainly had made up its losses with a stellar performance of +76% in 2009.

That is not correct, and it’s an easy mistake to make.

Say, you invested $100k in VWO the beginning of 2008. With a loss of 53%, this reduced your portfolio value to $47k at the end of 2008. In 2009, this ETF gained 76% bringing your portfolio value back up to $82,720. That means, despite the great gains in 2009, you still need to make another 20.89% just to get back to break even.

Such is the enormous power of a bear market. You need to avoid it at all costs. Otherwise, you will be stuck trying to make up losses which, despite market cooperation, may take years to accomplish.

Disclosure: I have no positions in the ETFs discussed above.