Last week’s sharp selloff, especially in the precious metals, pushed our core holding, PRPFX, lower at almost the same rate as the S&P 500. We crossed the trend line to the downside and came off the high by more than 7% triggering the trailing sell stop. As posted, I liquidated about 50% of our holdings.
Yesterday’s rebound in the metals helped our cause again, but with reduced exposure. All model ETF portfolios lost.
Take a look at the latest numbers:
More of the same, as hopes for a financial rescue plan powered global ETFs higher, but a last hour selloff devoured more than half of the early gains.
Nevertheless, we closed up with gold and silver showing signs of life again after getting hammered last week. While the investing world remains on a bailout high, some reality set in late today when looking at the obstacles such a plan must overcome before it even can be implemented.
Talk abounds that this maybe the start of the fall rally, so the question is whether this rebound has legs or not. Remember, we have been stuck in a trading range of some 100 points for 2 months using the S&P 500 as an example. Every time we’ve reached the upper range, which we came close to today, a sharp selloff took the index back down to the lower end.
The Technical Indicator featured this daily S&P 500 chart, which clearly demonstrates the range we’ve been trading in:
Nothing but hope provided the ammunition to drive this market out of the deep hole that was dug last week. Sure, after relentless selling, there is bound to be a dead cat bounce or a head fake similar to the one we saw the week prior.
The hope was that European regulators are designing a plan, or a crisis solution, to help stabilize the region via the expansion of a rescue fund and subsequent bond sales to provide the liquidity for banks to absorb the losses if and when Greece defaults.
While that was enough to soothe the markets, at least for one day, details emerged that, in order to raise enough funds to create a big enough bailout gun, leverage will have to be used. Some analysts likened this concept to the last hand in poker, as in “going all in.”
With the equity markets having slipped into bear market territory, and momentum numbers showing mostly negative figures, let’s look at bond and dividend ETFs from my High Volume Master list.
From the total of 51 ETFs that I track for this category, there are only 21 that qualify to be listed on this report, as their daily average volume exceeds $10 million.
Take a look:
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 9/25/2011.
After visiting the top part of the 6-week trading range the prior week, the major market ETFs got caught in a global crossfire, sold off sharply and ended up visiting the lower end of the range, and then some, which only took 5 trading days to accomplish.
It was a total reversal, and the previous rally will now go down in history as a dead cat bounce.
Europe and its multitude of debt solutions, most of them band aid approaches, will be on the agenda next week, which simply means that we will have to live with more market volatility.
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:
In case you missed it, my first video on the subject of trend tracking with ETFs/no load mutual funds has been posted on the right side of this blog replacing my old bio.
To get the best viewing experience, please switch to full screen mode once the video starts running.
This is strictly an overview to make it easier for new readers to understand the general concept. However, it is also my first attempt in a planned educational video series that I hope to complete during the upcoming winter months.
The current plan calls for the subject of trend tracking to be dissected into maybe 15-20 video segments covering all aspects of trend tracking, trailing sell stops and disciplined investing in general.
The first in the series on the topic of “How to determine your risk tolerance” has been completed and will be posted shortly in a special section of this blog.
Watch for the announcement.