Sunday Musings: ETFs In Outer Space

Ulli ETF News Contact

This is more of a personal story than one about hard hitting ETF facts.

You may have followed the current space flight, which left earth on June 7 from Kazakhstan. The spacecraft Soyuz was launched with 3 astronauts, a Russian, a Japanese and an American by the name of Mike Fossum.

The mission is to rendezvous with the space station and relieve the crew that has been orbiting for some 6 months. Their anticipated stay in space will also be about 6 months.

Mike Fossum happens to be a long-term reader of this blog and newsletter and is also a client. Before his departure, we discussed his adventure in space, and he assured me that he will have regular email access and will be able to send and receive email 3 times daily. As his time allows, he will be reading my musings about ETFs in outer space.

I got a brief note from him on Friday, after he had arrived at the space station, which said:

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ETF Leaders And Laggards – For The Week Ending 6/10/2011

Ulli ETF Leaders & Laggards Contact

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

Despite selling momentum continuing, there are always some ETFs, which buck the trend. This week, the winner was Russia and the loser was the Gold Miners. However, pressure remained in all areas, which makes this not the time to be a hero and do some bottom fishing.

Disclosure: No holdings

Which Investment ‘Style’ Will Give You The Best Returns?

Ulli ETF News Contact

A few days ago, MarketWatch featured an interesting research project titled “Wall Street’s Biggest Secret,” which showed some fascinating results. Let’s look at some highlights:

Wall Street has a wide array of mutual funds it wants to sell you. “Absolute return” this. “Midcap blend” that. “Small-cap growth” whatever.

Many brokers, advisers and salesmen will tell you that just the right mix of each one will give you a portfolio that’s “right for you,” with returns perfectly adjusted to your “risk tolerance.”

Phooey.

Before you invest a penny, listen to Bob Haugen.

He’s a former finance professor who’s spent half a lifetime studying the stock market. He’s written a number of books and papers, and is the co-author of remarkable piece of analysis entitled “Case Closed” and available here. Read the analysis .

He looked in excruciating detail at the characteristics of which stocks did best (and worst) over nearly half a century, from 1963 to 2007.

His finding?

Most of these “styles” are a waste of time. And the idea that you need to take on more “risk” to earn higher returns is a total con.

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06-10-2011

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ETF/No Load Fund Tracker For Friday, June 10, 2011

ETF/No Load Fund Tracker StatSheet

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

https://theetfbully.com/2011/06/weekly-statsheet-for-the-etfno-load-fund-tracker-updated-through-6092011/

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Market Commentary

Friday, June 10, 2011

MAJOR MARKET ETFs IN RETREAT – NO PLACE TO HIDE

The market’s stumble into June continued all week and was only interrupted by a short pause on Thursday, when a rebound attempt gave the bulls some hope. Other than that, the bears had a firm grip on broad downward momentum.

Global growth worries were brought back to center stage when China reported a smaller-than-expected trade surplus indicating a slow down. In Britain, industrial production took a turn for the worse when no change had been expected. Add to that the ever continuing debt soap opera in Europe, and you have a condition that is simply not supportive of rising equity prices.

The question remains if the major indexes can find some support before we actually slip into bear market territory. Looking at some widely followed indicators, we are getting close to a directional change.

The benchmark S&P 500 has reached a point that is within 0.64% of breaking its widely followed 200-day moving average. The Dow Jones Transportation index is equally weak and has come within 0.01% of breaking its respective trend line.

Our Trend Tracking Indexes (TTIs) are showing similar slippage as well as a divided picture:

Domestic TTTI: +2.16% (last week +3.46%)
International TTI: -0.70% (last week +1.67%)

Yes, the international TTI actually broke below its long-term trend line today, although by only a small percentage. In order to avoid a whip-saw signal, I will watch market activity for a couple of trading days, before issuing a Sell signal for that arena, since this indicator tends to be more volatile than its domestic cousin.

The S&P 500 is now barely hanging on to a 1% gain YTD, while our ETF Model Portfolios have fared far better, as I had expected, with the Aggressive Growth (#3) and Trend Tracking Portfolios (#1) leading the pack as of today with +4.33% and +3.98% respectively.

This current U.S. economic soft patch appears to be hardening, which may very well cause this bull market to die a slow death. Now that all stimulus attempts have been wasted, we will see what is left of the real economy.

How low can we go? Some technical analysts are seeing major buying support for the S&P 500 at around the 1,250 level, which would be below its 200-day moving average of 1,259. I for one will not wait to see if buyers actually show up, should we sink to that level from the current 1,271 close.

Sell stop wise, not too much happened today, although several mutual funds broke below their predetermined sell point. On the ETF side, only VEU (from our current holdings) slipped below and will be sold on Monday, unless a solid rebound emerges.

This is the time when the rubber meets the road, and you have to be alert to changes in major market direction. While there is always the chance of a dead cat bounce, such as we saw Thursday, the odds have clearly increased that more weakness will be with us.

At the risk of sounding like a broken record, monitor your sell stops and execute them when they reached their predetermined levels. Even if you follow the fundamentals, you have to admit that there are not too many arguments right this moment for much higher stock prices.

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 Kent:

Q: Ulli: What isn’t clear is what happens to the money from the funds that are sold in the ETF Model Portfolios?  I noticed cash percentages appear to be the same as last week, in those portfolios where funds have been sold.  If you get a chance, please clarify. Thanks!

A: Kent: Yes, I don’t really change the cash positions, since that is too cumbersome. I still show the sold positions with their value at the time of sale, but crossed out. I use that as a base for reinvestment whenever that time comes. That’s the theme I followed when I reinvested in XLV.

You are very observant!

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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/

ETF/No Load Fund Tracker For Friday, June 10, 2011

Ulli ETF Tracker Contact

ETF/No Load Fund Tracker StatSheet

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

https://theetfbully.com/2011/06/weekly-statsheet-for-the-etfno-load-fund-tracker-updated-through-6092011/

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Market Commentary

Friday, June 10, 2011

MAJOR MARKET ETFs IN RETREAT – NO PLACE TO HIDE

The market’s stumble into June continued all week and was only interrupted by a short pause on Thursday, when a rebound attempt gave the bulls some hope. Other than that, the bears had a firm grip on broad downward momentum.

Global growth worries were brought back to center stage when China reported a smaller-than-expected trade surplus indicating a slow down. In Britain, industrial production took a turn for the worse when no change had been expected. Add to that the ever continuing debt soap opera in Europe, and you have a condition that is simply not supportive of rising equity prices.

The question remains if the major indexes can find some support before we actually slip into bear market territory. Looking at some widely followed indicators, we are getting close to a directional change.

The benchmark S&P 500 has reached a point that is within 0.64% of breaking its widely followed 200-day moving average. The Dow Jones Transportation index is equally weak and has come within 0.01% of breaking its respective trend line.

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Weekly StatSheet For The ETF/No Load Fund Tracker – Updated Through 6/09/2011

Ulli ETF StatSheet Contact

ETF/Mutual Fund Data updated through Thursday, June 9, 2011

If you are not familiar with some of the terminology used, please see the Glossary of Terms.

 

1. DOMESTIC EQUITY MUTUAL FUNDS/ETFs: BUY— since 6/3/2009

As announced via a blog post, on 6/2/2009, the TTI triggered a buy signal with an effective date of 6/3/2009. We will use the 7% trailing stop loss of our positions as an exit point or the crossing of the trend line to the downside, whichever occurs first.

As of today, our Trend Tracking Index (TTI—green line in above chart) has broken above its long term trend line (red) by +3.05%.

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