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

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

Continued sideways activity kept us away from a new domestic Buy signal.

Our Trend Tracking Index (TTI) for domestic funds/ETFs has moved now +1.35% above its long-term trend line (red), which means we remain close to breaking out to the upside of the neutral zone (+1.50%).



The international index dropped to -2.81% below its own trend line, keeping us in a sell mode.

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

Today, the major indexes meandered sideways with an upward bias; however, they closed higher recouping some of yesterday’s losses.

Our Trend Tracking Indexes (TTIs) recovered as well and the domestic TTI broke out of its neutral zone (+1.50%) and currently sits +1.58% above its long-term trend line. Yes, I feel like I sound like a broken record when repeating again that we need to see this level supported for a couple for trading days before making new commitments to the domestic arena.

After today’s close, the world’s largest insurance company laid an “AIG” by reporting that it suffered a $7.81 billion first-quarter loss, its second big loss in a row. While this should pressure the markets tomorrow, you never know these days, as some might interpret this as the worst being over and good times are here again.

If you find the constant lack of direction and follow through that the market has been throwing at us maddening, you’re not alone. Yesterday’s broad retreat was a reminder again how fickle this market has become and that at any given time any event can derail the upward momentum.

While we were within striking distance of a new domestic buy signal, our Trend Tracking Indexes (TTIs) have now again retreated into the neutral zone, which is an area defined as a range of -1.50% below its long-term trend line to +1.50% above it.

Yesterday’s sharp pull back has positioned our TTIs as follows:

Domestic TTI: +0.96%
International TTI: -2.57%

Internationally, nothing has changed since our sell signal on 11/13/07.

Domestically, as you know from my weekly updates, we have been waiting for a new buy signal, which almost, but not quite, materialized several times over the past few weeks.

We’re now back to the drawing board waiting for this uptrend to show some legs before making any further commitments. On average, we’re about 70% in cash with the balance being invested in those areas that have generated good upward momentum independently of the domestic U.S. market.

Despite a sharp drop after the market opening on Tuesday (see chart), the major indexes recovered and closed higher with solid gains. In the face of $123 crude oil, and predictions of prices moving into the $150 to $200 area in the next 6 to 12 months, the markets resisted any sell off attempts.

Our domestic Trend Tracking Index (TTI) broke out of the upper band of the neutral zone (+1.50%) again and sits now +1.64% above its long-term trend line. If we can stay above the +1.50% level for a couple of trading days, that will constitute a new domestic Buy signal.

In the meantime, our holdings in the Latin American markets as well as the Transportation Index have moved up nicely, and I will add a second increment. Some domestic no load funds have now crossed their own individual trend lines as well, which will bode well for this uptrend if a Buy signal is in fact generated.

The International TTI improved as well, but still remains below its trend line by -1.29%. I will keep you posted via this blog as to day-to-day changes.

Leave it up to bankers, the main contributors to the mortgage crisis, to come up with the stupid and ignorant quote of the year (or possibly of the century). Reuters reports in “Bank of America-Countrywide to curb risky mortgages:”

Bank of America Corp said on Tuesday it plans to stop offering some riskier mortgage loans after it finishes buying Countrywide Financial Corp., the largest U.S. mortgage lender.

“We recognize this tightening, by definition, restricts the availability of credit to some borrowers,” said Bruce Hammonds, Bank of America’s global consumer credit executive. “However, this will help ensure that those who get loans can afford to repay them.”

[emphasis added]

Duh? As opposed to doing what? Extending credit to anybody who can fog up a mirror? Hello Mr. banker; a fact that you may have been missing is that some people are simply not credit worthy, should not have credit extended to and should not own a home. Has this realization now finally set in, where it should have been part of responsible loan underwriting all along?

Ok, so ignorant, selfish and greedy bankers are a pet peeve of mine. If you are one, tough! This blog is not about political correctness but saying it as it is. Ah, I feel better; I had to get this off my chest.

MarketWatch featured an article titled “Five signs the stock market has bottomed.” Here are some highlights:

Are we there yet? That’s what investors want to know as they search for a bottom after six punishing months for stocks. People are understandably eager to be done with this downturn and see markets move forward.

It’s a tough wish at a time when the U.S. economy is clearly contracting and likely in recession. The good news is that stocks typically recover several months ahead of the economy. The bad news is that we’re probably closer to the beginning of this slump than the end.
…
Remember that the stock market will show signs of bottoming well before every bit of bad economic news is wrung from the headlines. These milestones won’t be obvious or appear at once, and keep in mind that just because stocks stop going down doesn’t mean prices will roar to new records. The damage to the economy is done, and will take time to repair.

The story goes on to acquaint the reader with five key leading indicators to watch for so that you will be the first to know when that elusive bottom actually occurs.

There are faulty assumptions with some of the reasoning in this article.

First, despite Wall Street employing more fortune tellers than any other industry, no one can with any amount of certainty forecast or determine a market bottom. Many have tried and failed, and those who succeeded had a temporary stroke of luck, which went out the window with the next forecast.

Second, the assumption is that everybody is looking to buy at the very bottom. Since that point can’t be determined as it is happening, this will be at best a 50/50 chance of the market rebounding or further sinking into oblivion.

Third, my experience tells me that a bottom can only be determined after it has occurred. In other words, we need to see a sustained rally off a bottom formation and only then can we reasonably assume that the trend has reversed from down to up. The opposite occurs at top formations.

Fourth, trying to determine ahead of time whether a bottom has been formed is an exercise in futility and a wild guess at best. For your long-term investment success, it is not necessary to try to engage in risky bottom fishing. Following trends and investing in mutual funds/ETFs as they break out above their long-term trend lines will not only keep you on the right side of the market, but also let you live a much more worry-free investment life.