Wall Street got its version of an early Christmas present by finally getting a long wished for rate cut by the Fed. Not only that, the cut was wide and deep, encompassing the Fed Funds rate and the Discount rate at a hoped for ½ point rather than the acceptable ¼ point.

As the chart above shows, the reaction was fast and furious with all major indexes scoring solidly.

Our Trend Tracking Indexes (TTIs) rallied as well and moved above their respective trend lines as follows:

Domestic TTI: +5.38%
International TTI: +2.17%

It will be interesting to see if this move to the upside will be supported in the coming days (and weeks) by more buying which is necessary to support this breakout from the current sideways pattern.

We are holding all current positions subject to our sell stop rules and are adding where appropriate.

On September 10, Barclays Global Investors debuted the first ETF to track the U.S. municipal bond market, which will provide investors a different way to invest in municipal issues as reported by Bloomberg.

My preference for investors with after-tax money wishing to generate income has always been the use of closed end muni funds, the benefits which have been detailed in my free e-book. This will offer investors another opportunity, and I will track pricing and yield of the new iShares S&P; National Municipal Bond Fund (MUB) to see how it compares to old fashioned muni CEFs.

One obvious advantage is the instant diversification this $294 million ETF would provide. Income is distributed monthly and throughout the day pricing provides more transparency than individual bonds. The expense ratio is pegged to be $25 for every $10,000 of assets.

Not to be outdone, State Street announced a similar offering to be available around September 13. Another player in that field is the SPDR Lehman Municial Bond ETF, with the ticker symbol TFI which will track the three-year old Lehman Brothers Municipal Managed Money Index.

With other offerings in the pipeline, it is the individual investor who will benefit by having more and better choices, which is a development I applaud.

The problems and tremendous cash needs of Countrywide (as a stockholder you might prefer the name “Countryslide”) made me reflect on my recent dealings with them and how a company that size could get themselves in such a predicament.

The $2 billion cash infusion by Bank of America seems to be gone and it appears that Countrywide is on the prowl for more money. Who knows what the story may be tomorrow.

As a borrower, I had a disagreement with Countrywide regarding my own mortgage. I will spare you the details, but suffice it to say that company computer generated letters generally do no solve issues. Neither do phone calls to known numbers of their alleged service department. Faxes to widely advertised numbers disappear in the digital waste basket.

If you ever had difficulties with your mortgage company, or are trying to resolve an issue, you may want to follow the route that I have taken over the past 30 years, which has never failed to get results. While I did not always get 100% satisfaction, I have come close in most cases.

I have found that it’s a useless and frustrating exercise to get anything accomplished via a company’s regular service department. There is no need to even bother since it appears to me that they employ and train people in problem avoidance, and I suspect that they pay bonuses to those reps who can get rid of a calling customer the fastest.

Here’s what I do: I find out who the President or CEO of the company is, and the location he works from. In the case of Countrywide it was easy since, as a public company, this information is readily available.

Without anger, I write a letter describing the problem and my attempts to solve it. I ask for his assistance in getting this issue resolved. I mail that to him as a certified letter (personal and confidential) with return receipt. Once I’ve done that, I sit back and watch what happens.

My theory is that the guy at the top did not there (in most cases) because he is incompetent. He got there because of his abilities, but he’s handicapped because he can’t instill his beliefs and desires to run a great company in the hundreds or thousands of people working for him.

When he gets a polite but firm customer letter requesting his help, he will not be a happy camper and immediate action will be the result. That usually takes the form of a high level assistant or other competent person contacting you by phone trying to resolve the issue on his behalf, which will happen with amazing speed and accuracy.

In my dealings with Countrywide, I sent 4 certified letters (couldn’t decide which one of the top dogs to contact first) and, within a few days, I was not only in direct contact with the personal assistant to the President, but also in possession of his personal phone and fax number.

Essentially, this is a game you have to play nowadays when dealing with any large company. Don’t get mad and frustrated; just get even by knowing you can come out on top by working the corporate food chain from the right angle.

Since ETFs trade like stocks, large Bid-Ask trading spreads can eat into your potential profits. As a general rule, this does not appear to be a problem with ETFs that are heavily traded. To demonstrate, at the time of this writing, I checked out the spreads for 2 ETFs that I don’t have any positions in at the moment.

Let’s take a look at EFA, one of the most heavily traded ETFs with a daily average volume of some 7.5 million shares. The current Bid-Ask spread is 76.66-76.67, which is a difference of 1 penny.

Contrast that with DGG, and an average volume of just over 7,000 shares, and you will see a Bid-Ask spread of 32.13-32.19, which is a difference of 6 pennies. If you want to look at it as a percentage of the current price, the difference becomes even more glaring.

Again, this is only one aspect of selecting an ETF, but a very crucial one. More importantly, low volume will also make it more difficult to get out when your sell stop point gets triggered and the exit doors become more crowded.

Just because new ETFs are being offered and cover a unique area does not mean that you should invest blindly. My rule is to watch newcomers for about a year or so to see how pricing and volume develops.

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

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

The bulls had the upper hand and the major indexes ended up in positive territory.

Our Trend Tracking Index (TTI) for domestic funds/ETFs moved higher to +4.03% above its long-term trend line (red) as the chart below shows:



The international index also remained +0.84% above its own trend line, keeping us still on the buy side.

MarketWatch recently featured Jim Stack, editor of the Investech newsletter as saying that “Bull Markets don’t die of old age, they die from deterioration and economic imbalances, and we are seeing economic imbalances now.”

That’s been my experience as well, and I agree with his assessment. While he did not predict a speedy end to the bull—election-year politics may help it run longer—he now advocates a cash position of some 50%. However, he also recognizes that the market run could continue for another 16 months.

While all of his arguments are valid observations, the fact remains that they are still guesses or predictions about the future. That’s the problem I have. I can’t agree with making changes to investment positions just because this or that event may or may not happen in the future.

My preference is to see actual changes in trends and prices, which can be measured, before adjusting my investments.