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

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

Profit taking pulled the markets down, but the bulls prevailed and the week ended up on a positive note.

Our Trend Tracking Index (TTI) for domestic funds/ETFs has moved to +6.42% above its long-term trend line (red) as the chart below shows:



The international index inched higher to +5.61% above its own trend line, keeping us safely on the buy side:



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

MarketWatch had a piece called “Avoid Mediocre Funds In Hot Sectors.” Finally, it’s a story I can agree with because being in a great performing sector should be every investor’s goal. However, just because a sector is hot, does not mean that every fund/ETF in it is performing up to par.

The article states to sell a few funds that apparently are not great performers. In particular, they are recommending selling PRGFX (my M-Index rating is +10), VWUSX (+10) and DEFIX (no rating available).

Instead, you are supposed to be buying TMGFX (+15), JORNX (+18) and JAVLX (no rating available). While these funds maybe OK replacements based on my momentum numbers, there are some that are even superior performers.

If you utilize my weekly StatSheet on a regular basis, you would have known that, for example, funds like WLGYX (+20), BSMAX (+20) and TWHIX (+19) have stronger momentum numbers and have performed better.

While chasing performance is generally frowned upon by Wall Street’s talking heads, it’s a great way to grow your portfolio as long as it is used in conjunction with a clearly defined exit strategy to protect you from too much downside risk.

I am obliged to tell you that from the list of funds above, I and my clients have positions in WLGYX only.

Another good start to a new week had all of the major indexes moving higher. Below please find the link to the most recent ETF Master list, which has been updated with yesterday’s closing prices. This will enable you to work with more recent data. You can download the file at:

http://www.successful-investment.com/SSTables/ETFMaster100907.pdf

At this point, our Trend Tracking Indexes (TTIs) remain solidly in bullish territory with the domestic and international one sitting comfortably above their long term trend lines by +6.84% and +5.78% respectively.

If your personal preference is to use environmentally friendly ETFs whenever possible, there are a number of them which might be of interest to you. Of course, just because an ETF is exposed to that area, does not mean it is an appropriate investment at this time.

ETF Trends had a listing of 9 ETFs that are involved in that sector, of which 7 are listed in my weekly StatSheet. If the clean-tech sector is an area you are looking to invest in, you may want to check out this list, which includes my Momentum (M-Index) numbers as of 10/8/07:

PBW (+16)
PZD (+14)
EVX (+12)
GRN (+6)
PUW (+5)
GEX (+8)
PBD (+16)

While we currently have no holdings in any of the above ETfs, this may change if they move up higher in the sector rankings.

Seeking Alpha recently featured an article called “Are You Missing the ETF Rally?” Some of the points are very interesting, confirming what I have been advocating for a long time that a disciplined investment method is of utmost importance for long-term success.

The featured computer model shows a listing of ETF sector rankings, somewhat similar to my StatSheet, although derived from a different approach. Some of the ETF rankings are close to my own, although I don’t know how complete their data base is. It does not really matter, what matters is that via a ranking system you can easily identify those ETFs which are showing leadership and, more importantly, those which are not.

Just as selecting the appropriate ETFs is paramount, staying away from those that are heading for the basement can be even more important for your portfolio’s health.

Much has been written about former Fed Chairman’s new book “The Age of Turbulence.” While I have not read it, Elliott Wave International had a few excerpts and quotes about it.

Apparently, Mr. Greenspan feels that the current housing bubble was something that could not have been forecasted specifically. This article then goes on to quote the various prior public media announcements that the Elliott Wave Forecast has made alerting to the potential real estate blow up.

It’s interesting to note that various writers and publications now are trying to take credit as to who made the first call in predicting the crisis. Again, the problem is in “predicting.” No one has the ability to look into the future; it is nothing but a wild guess. And yes, the handwriting was on the wall that real estate assets can’t simply go on inflating forever.

This graph shows the rising real estate housing prices over the past 20 years. The trend was clearly up and then reversed at the top. If you had the weekly data available, you could easily plot a long term moving average and see the point when it broke below the trend line; in the same fashion as we do with mutual funds and ETFs. However, the break to the downside, indicating a bear market, obviously occurred after the top had been formed.

While this would have indicated a trend reversal, it would not been of any value, since real estate is an illiquid asset, and this type of timing to sell would have been way late.

My view is that once a trend has been set in motion, as in the case of real estate, there is not much the Fed could have done to stop it short of draconic measures. One such measure would have been raising interest rates sharply which would have ended the real estate boom in a hurry.

However, the fallout effect on the economy as a whole would have been far reaching and extremely negative. This makes me believe that once any asset bubble has been formed there is no choice but to let it pop and live with the consequences.