Now 7 ETF Model Portfolios You Can Use – Updated through 8/2/2011

Ulli Model ETF Portfolios Contact

The moment the battle over the debt ceiling was settled, the markets headed south on the ever increasing awareness that all is not well in economic wonderland, and that the much hoped for second half recovery may very well be a pipedream.

Our ETF model portfolios were affected by these selloffs, but some held up better than others. This is the type of environment, which is well suited for my #1 Trend Tracking Portfolio, which is built around the core holding in PRPFX.  It would have held on to the #1 spot, had I not added the #7 portfolio, which represents the ETF equivalent of PRPFX. The YTD performance is simply superior.

It’s been an interesting 2 trading days so far, with the S&P 500 going negative YTD, so take a look at the changes over the past week:

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Major Market ETFs Break Support Levels

Ulli Market Commentary Contact

Life after the completion of the endless debt ceiling debate proved to be a challenge for Wall Street, as finally the economic reality sank in that all is not well with the alleged 2nd half recovery.

With today’s sharp selloff, serious technical damage was done, as widely watched major trend lines were violated, which could invite more selling. Especially disheartening was the fact that we closed at the lows of the day, as the chart above (courtesy of MarketWatch.com) clearly shows.

Here are some of the widely followed indexes and the percentages by which they have moved below the line and into bear market territory:

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Market Review – Mutual Funds On The Cutline – Updated as of 7/29/2011

Ulli Mutual Funds On The Cutline Contact

Indications of a deal to raise the debt ceiling had the futures market soaring prior to Monday’s opening. Well, the euphoric rebound actually happened, but it turned out to be short lived, as the major market ETFs staged a 180 degree reversal, only seen 10 times since 1985, and a steep sell off ensued.

It was simply a violent display of volatility, as the S&P 500 plunged through its 200-day moving average of 1,285. Thanks to bottom fishing, the indexes recovered, with the
S&P 500 closing back above this dividing line between bullish and bearish territory. It could have been a lot worse, as a weak manufacturing report took the starch out of a solid opening rebound.

The overall downtrend of the past week made its mark on the mutual fund cutline table as many funds continued to slip. Due to data unavailability, the following cutline report is updated through Friday, July 29th.

This week, there are 442 funds located above the cutline and 427 below it. I am showing the first 250 on the bullish side and the first 100 on the bearish side:

Take a look:

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Expanded ETF Master Cutline List – Updated through 7/29/2011

Ulli ETFs on the Cutline Contact

With the markets having sustained losses for 5 straight days, it’s no surprise that the number of ETFs hovering above the cutline has been severely reduced from the prior report.

This week, there are 188 ETFs listed above the cutline (down from 321) and 208 below it (up from 75), which is a clear indication of a change in market direction. Whether that will be sustained is still wide open and currently depends on the outcome of the debt ceiling debate. As I am writing this (Sunday afternoon), indications are surfacing that a compromise across party lines indeed may have been reached, but the final word has not been spoken yet.

Should this compromise materialize, we will certainly see a euphoric reaction rebound on Wall Street. However, how long this will last in the face of the recent poor GDP news, while a questionable jobs report is lurking on the horizon, is the big unknown.

Even as Wall Street got clobbered, some ETFs have resisted the selloff, as you can see in this new expanded ETF Cutline report:

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Last Week In Review: ETF News And Blog Posts

Ulli ETF News Contact

In case you missed it, here’s a summary of the ETF topics that I posted to my blog during the week ending on 7/29/2011.

The drubbing continued, and the S&P 500 ended up losing 3.9% for the week. As I posted yesterday, we are within striking distance of breaking the S&P’s 200-day moving average to the downside, which will not bode well for equities.

Besides the uncertainty of the debt ceiling battle, looming large will also be Friday’s jobs report along with other economic data. This is not the time to be a hero and engage in bottom fishing; this is the time for portfolio preservation via my recommend trailing sell stop discipline.

My published Cutline tables and Model ETF Portfolios can give you an assist by indentifying weakness and strength in various market segments so that you can make better investment decisions by avoiding exposure in those areas that are trending down.

This week, we covered the following:

“Reviewing The ETF Equivalent Of PRPFX”

“ETF Leaders And Laggards – For The Week Ending 7/29/2011”

“ETF/No Load Fund Tracker For Friday, July 29, 2011”

“Weekly StatSheet For The ETF/No Load Fund Tracker – Updated Through 7/28/2011”

“Market Commentary – High Volume ETFs On The Cutline – Updated Through 7/27/2011”

“6 ETF Model Portfolios You Can Use – Updated through 7/26/2011″

“Expanded Report: Mutual Funds On The Cutline – Updated as of 7/25/2011”

“NEW: Expanded ETF Master Cutline List – Updated through 7/22/2011”

Reviewing The ETF Equivalent Of PRPFX

Ulli ETF News Contact

Much has been written about the creation of an ETF equivalent of the popular Permanent Portfolio fund (PRPFX). As you know from my Wednesday ETF Model Portfolio listings, a combination of PRPFX with a variety of ETFs has been my preferred mode of operation during these times of uncertainty.

From the articles covering the subject, none of them offered a graphic performance comparison to see how well an ETF equivalent would track the original PRPFX fund.

With the help of reader Richard, who is a far better chartist than I am, we created the following ETF combination and tracking chart while, at the same time, comparing the result to the S&P 500 (SPY).

Take a look:

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