ETF/No Load Fund Tracker For Friday, May 20, 2011

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ETF/No Load Fund Tracker StatSheet

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

https://theetfbully.com/2011/05/weekly-statsheet-for-the-etfno-load-fund-tracker-updated-through-5192011/

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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.

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Weekly StatSheet For The ETF/No Load Fund Tracker – Updated Through 5/19/2011

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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%.

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High Volume ETFs On The Cutline – Updated Through 5/18/2011

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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.

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What Is A Secular Cycle?

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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.

6 ETF Model Portfolios You Can Use – Updated through 5/17/2011

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Again, the market pullback continued during the past 5 trading days and affected all of our portfolios. No trailing sell stops were triggered though, but VDE (Energy) has now come within shouting distance (-9.5% off its high). Remember, for volatile sector/country ETFs, my trailing sell stop is 10%, while for less volatile areas it is 7%.

The slide in energy appears to be a good representation of global economic weakening and less demand, which has affected all areas. Even the metals continued slipping, despite rising worldwide uncertainties. I would imagine that a rebound in gold will be in the cards as soon as the European debt crisis worsens, which is just a matter of time.

The repeat winner for last week turned out to be again the ETF income portfolio (#5), which dropped but still remains in the top spot in terms of YTD performance.

Let’s look at the portfolios in order:

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Battle Of The Titans: Soros Sells Gold ETF While Paulson Buys – Who’s Right?

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The IB Times had this to say on the apparently opposing views of the sale and purchase of the Gold ETF (GLD) by Soros and Paulson:

The confirmation of George Soros ETF gold sale has again garnered much media comment. Soros’ $28 billion fund decreased its holdings of the SPDR Gold Trust, the exchange traded fund.

Soros had bought gold to protect against possible deflation, though his fund now believes there is a reduced chance of such a condition, the Wall Street Journal recently said, “citing people close to the matter”.

Should Soros and his fund think that inflation is now a greater risk than deflation then it is curious that they would sell all their ETF holdings. It is also curious as Soros is on record regarding having serious concerns regarding the outlook for the euro and the dollar and the dollar as reserve currency of the world.

There is of course the precedent of other hedge fund managers , such as David Einhorn, who have also sold their gold ETF holdings but bought physical bullion in allocated accounts due to a concern about counter party and systemic risk.

It is quite possible that Soros’ fund has adopted a similar strategy.

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