Here are this past week’s top 5 winners and losers from my High Volume ETF Master List:
In a repeat performance, the international TTI (Trend Tracking Index) has shown more weakness than the domestic one. This is clearly confirmed again by the worst performers of the bunch with 4 out of 5 being country ETFs.
Disclosure: No holdings
Several readers have emailed recently as to the best way to get started investing in the ETF model portfolios featured on my blog. Peter’s comment is very typical of the ones I received. This is what he had to say:
I would like to invest using one of your model portfolios. 1. Can I start now? 2. What percentage of my investment should I start with?
First, the “can I start now?” question has a come up on various occasions. Apparently, there has been some confusion in readers assuming that all portfolios are on hold due to my “Action” column in the Sell Stop tracking matrix indicating “Hold”.
To be clear, this “Hold” simply refers to the status of the respective ETF when it comes to its sell stop and NOT to the portfolio itself. In other words, as long as the domestic Trend Tracking Indexes (TTIs) are in “Buy” mode, meaning above their respective trend lines, you can set up a new portfolio at any time.
ETF/No Load Fund Tracker StatSheet
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THE LINK TO OUR CURRENT ETF/MUTUAL FUND STATSHEET IS:
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Market Commentary
Friday, May 20, 2011
A BULL IN THE HEADLIGHTS
This past week’s market activity resembled the same theme as we’ve seen lately. An early sell-off followed by a recovery attempt, and then a close within a few points of the unchanged line.
While it was a volatile ride again, the bulls appeared to be frozen and can’t seem to find their bearings thereby yielding the trading floor to the bearish crowd. However, neither bulls nor bears have been making any serious headway, which means we’re stuck in no man’s land.
While first quarter earnings were strong, recent economic data were not exactly a chest pounding event keeping the markets in neutral.
Taking center stage was the European debt crisis, which seems to be on the cusp of a major event taking place.
ETF/Mutual Fund Data updated through Thursday, May 19, 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 +4.99%.
Here’s the latest update of those High Volume ETFs, which are hovering within 20 positions below and above their Cutline (trend line). High Volume (HV) ETFs are defined as those with an average daily volume of $10 million or higher.
These ETFs are generated from my selected list of 90 that I use in my advisor practice. It cuts out the “noise,” which simply means it eliminates those ETFs that I would never buy because of their volume limitations.
While yesterday’s rebound was overdue after the recent slide, it only had a limited impact on this week’s report. The following equity ETFs slipped below the yellow cutline from their previous positive positions:
VPL (Japan Stock) from +5 to -1
BRF (Brazil small cap) from +4 to -2
SLX (Steel) from +3 to -3
EEB (Diversified Emerging Mkts) from +1 to -6
Again, when ETFs move above the line, that does not make them an automatic buy. You want those contenders to remain there for a while and build up positive momentum numbers all the way across (4 wk, 8 wk, 12 wk, YTD) before considering them as investment quality material.
If you look at the table, you will notice only one ETF that fulfills these criteria.
You can hardly watch a financial news show without hearing the word “secular cycle” being mentioned, but what is its exact definition? Let me first give you the short version:
When the word “secular” is applied to stock market cycles, it denotes an extended period with something in common throughout. Secular bull markets are long periods that cumulatively deliver above-average returns. Secular bear markets are the opposite; they bring cumulative below-average returns.
Not only does the term secular refer to the cycles of returns, but also it refers to the underlying cycle of inflation that drives these periods. The term “secular” in one word complements “cycle” to define periods in the stock market, their causes, and their patterns.
For a more in depth discussion of secular cycles including charts, please see Doug Short’s article on “What “Secular Cycle” Means.