My latest No Load Fund/ETF Tracker has been posted at:

http://www.successful-investment.com/newsletter-archive.php

A zigzag week closed out the month of May with the major indexes suffering losses.

Our Trend Tracking Index (TTI) for domestic funds/ETFs remains above its trend line (red) to the upside by +1.06% (last week +1.29%) keeping the current buy signal intact. The effective date was June 3, 2009.

The international index broke below its long-term trend line by -3.90% (last week -4.72%). A Sell Signal was triggered effective May 7, 2010. We are no longer holding any positions in that arena.

For more details, and the latest market commentary, as well as the updated No load Fund/ETF StatSheet, please see the above link.

The past two trading days were a tale of complete opposites. On Tuesday, we witnessed a sharp drop at the opening with the major indexes spending the remainder of the day clawing back to close around the unchanged line.

Yesterday, it was the exact opposite as a nice rally fell apart in the last 1-1/2 hours, and we ended up in negative territory with the Dow surrendering the 10,000 level for the first time since February.

This type of market behavior is clearly a sign that we are at a crossroads. There appears to be no clear long term trend in place, and we are aimlessly flapping back and forth based on the latest news.

These days, it’s not the domestic news menu that is disturbing but the international one. With Europe being fairly quiet for a change, encouraging reports on durable goods and new homes sales helped the bullish cause until news surfaced that China was reviewing its holdings of Euro zone debt because of potential defaults.

That’s all it took, and south we went for the remainder of the day. Despite the close in the red, our domestic Trend Tracking Index (TTI) remains above its long-term trend line but only by a meager +0.62%. I took advantage of yesterday’s early rally to liquidate 2 sector holdings, which were bouncing around their sell stop points.

As I am writing this early Thursday morning in Germany, the futures are pointing to a higher opening with the S&P; up by about 1%. As we’ve seen in the recent past, this can be meaningless as far as the outcome for the day is concerned.

We may see some type of a rebound rally, but momentum has clearly changed and a move to bear market territory, as measured by our domestic TTI, remains a distinct possibility. Right now, I’d rather be safe than sorry.

Yesterday, proved to be another breathtaking day on Wall Street. From my current vantage point in Hamburg, Germany, I was watching the European and Asian markets getting crushed with the U.S. futures pointing to a much lower opening.

The Dow dropped almost 300 points right out of the gate while the S&P; 500 gave back some 3% initially and briefly touched 1,041, which turned out to be a support level. Some of the shorts closed out their positions while market technicians used the 1,045 level as a buying opportunity resulting in a move back close to the unchanged line.

While yesterday’s rebound was a welcome reprieve, it does not mean the pullback is over. Some analysts believe a short-term rally over the next few weeks could push the S&P; back to just above the $1,200 level. While I can agree with that, I also believe that the downturn is far from being over and the possibility of another bear market still exists and may have been merely postponed.

Nevertheless, while things looked bleak at the opening, where a break of the domestic TTI into bear market territory appeared to be a sure thing, it did not turn out that way. The domestic TTI remains above its long-term trend line by +0.89% and in bullish territory. Internationally, things look a lot worse with international TTI being stuck below its respective trend line by -6.01%.

As I am writing this, the futures are pointing to a slightly higher opening. While this does not guarantee anything, it will be interesting to see if yesterday’s rebound has any legs to stand on or if we’re heading south again.

Many bulls had to be disappointed with the lack of follow through buying on Monday after Friday’s mini rebound.

The upside attempt was there, as the chart shows, but in the end we closed near the day’s lows; not a good sign.

As I am writing this late Monday night (actually Wednesday morning here in Germany), the futures are pointing to a sharply lower opening with the SP 500 being down some 1.5%. This can change of course, but for right now it appears more downside pressure is lurking.

The European crisis remains with us, but saber rattling in Korea may add to more uncertainty in the market place with other hot spots waiting in the wings. Economically speaking, there are still tremendous real estate bubbles in the making in Canada, Australia and China, any of which can burst at anytime contributing to more market negativity.

Our domestic Trend Tracking Index (TTI) slipped with the sell off yesterday and only remains +0.81% above its long-term trend line. It will not take much downside momentum to move this indicator into bearish territory as well.

No matter what the market will do next, I am far more comfortable with the fact that we have greatly reduced our exposure (due to our sell stops) with only a few sector funds left in our portfolios.

With the markets having fallen sharply off their highs, our domestic TTI (Trend Tracking Index) is still hanging on to bullish territory, but only by a thin thread.

Another meaningful down day/week and this indicator will most likely join the international TTI in bearish territory.

Several readers have emailed over the past week or so with a similar theme in regards to a possible re-entry point after having been stopped out. Apparently, more clarification is needed. This reader’s comment was typical:

Thanks to your Saturday blog; I finally understand your rule about taking out a former high before re-buying a fund.

Vanguard Capital Value still has not reached the 11.14 where I was stopped out in June 2007, but the TTI took out all of our highs in 2007 and again in 2008–in effect letting us whip-saw the market before it whip-sawed us and letting me buy back.

In terms of looking for new re-entry points, it is absolutely immaterial what the high prices were in 2007/08. What matters is what the high has been for your mutual fund/ETF during this buy cycle since you purchased it.

Here’s a simple example. The current domestic buy cycle started on 6/3/09. Say, a few days thereafter you purchased Fund A at a price of $10. The subsequent ongoing market rebound pushed this fund to a high price of $12.00 before the pullback stopped you out at around 11.16, which represents a 7% drop off the high.

$12.00 is the high price I am referring to when looking for a re-entry point, not some high price from a few years ago. In other words, a conservative way to re-enter would be once the old high of $12 has been taken out again, should the market resume its upward trend.

If you’re aggressive, you may not want to wait that long, but pick a lower re-entry point. Personally, however, I want to make sure that any rebound effort is not just a head fake but a real resumption of the old up trend.

Right now, with the extreme moves in the markets we’ve seen, I think it’s safer to be a little late than make a decision too early and get whip-sawed again.

As announced, I’m on my way to Germany, so there will be no article today. I will resume regular posting on Monday, although it may be at odd hours due to the time difference.