ETF/No Load Fund Tracker Newsletter For Friday, December 16, 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/2011/12/weekly-statsheet-for-the-etfno-load-fund-tracker-newsletter-updated-through-12082011/

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Market Commentary

Friday, December 16, 2011

MAJOR MARKET ETFS BARELY STAY AFLOAT AS ECONOMIC CURRENTS PUSH DOWN

In a near repeat of yesterday, major market ETFs inched forward a smidge with the S&P 500 gaining 0.32% but losing 2.8% for the week. Although there was a glimmer of hope stateside today, European markets were marginally in the red as the Eurozone is stuck under dark skies.

Yet, the telling indicator of market sentiment lies in bond markets, where investors are in “flight to safety” mode. The 10-year Treasury fell once again to a yield of 1.85%. Although the U.S. has its fair share of problems, I strongly believe that developed market and emerging market investors will view the U.S. as a safe haven to park their money during periods of instability.

Plus, the Treasury said that Europe remains a very serious risk to the U.S. economic climate, although this realization might be a little too late as the contagion has spread from peripheral Europe to the core of Europe. And at this point, no one is immune to Europe’s deterioration.

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Weekly StatSheet For The ETF/No Load Fund Tracker Newsletter – Updated Through 12/15/2011

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ETF/Mutual Fund Data updated through Thursday, December 15, 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 10/25/2011

The domestic TTI broke through its long-term trend line generating a Sell for this area effective 8/9/2011. Over the recent past, we’ve seen the TTI hovering slightly below and above this dividing line between bullish and bearish territory. The clear break to the upside occurred on 10/24/11 and, effective 10/25/11, a new Buy signal for domestic equities is in effect.

As of today, our Trend Tracking Index (TTI—green line in above chart) has broken above its long term trend line (red) by +1.33%. Be sure to tune into my blog for the latest updates.

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Funky Day On The Street As ETFs Zigzag

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[Chart courtesy of MarketWatch.com]

Markets were in a state of flux today as the S&P 500 bumped up only 0.32%. Nevertheless, the Euro remained at $1.30/Euro while commodities didn’t fluctuate tremendously. Pretty much, the outlook hasn’t brightened any more today.

However, on the Asian front, markets took somewhat of a dive as the Shanghai Composite and Nikkei dropped 2.14% and 1.67%, respectively.

IMF chief Christine Lagarde highlighted the severity of the Eurozone crisis by advocating a coordinated effort to stem the contagion. She went so far as to imply that we can see a worldwide economic collapse akin to the Great Depression. The risk certainly hasn’t dissipated.

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Major Markets ETFs Slide Once Again

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[Chart courtesy of MarketWatch.com]

Major market ETFs continued to see red again as the situation in Europe worsens. Markets worldwide felt the brunt of the Eurozone’s woes as the S&P 500 fell 1.14% while some European indices hurt even more. In line with this, the Euro prolonged its slide against the dollar, now reaching $1.30/Euro.

There was some serious action in commodities as well. Gold dropped a massive 5.12% to hit $1,575 while oil took a steep drop down to $95. Also, 10-year Treasury yields dropped to a yield of 1.90% as investors flock to seemingly safer U.S. government fixed income securities.

Bernanke announced today that there are no plans for the Fed to offer direct aid to Europe. However, a major turn for the worse could change that seeing that the recent central bank intervention wasn’t initially planned. Europe is simply too volatile to have any concrete idea of what may come next.

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7 ETF Model Portfolios You Can Use – Updated through 12/13/2011

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After the prior week’s gain, the S&P 500 lost -2.54% since last Wednesday’s update. As a result, those ETF portfolios with mainly bond exposure gained, some stayed even and some lost slightly.

Again, any sharp market pullback, or gain for that matter, will not affect our models significantly due to the high cash holdings and only limited equity/sector positions.

At this point, with the markets seesawing based on the latest news from Europe, I see no reason to increase risky equity exposure. Despite the much hyped EU summit last weekend, nothing tangible to solve the immediate debt crisis has come out of the endless meetings.

In lieu of that continued uncertainty, I will only change my mind and add equity ETFs if market conditions along with momentum numbers improve.

Take a look at the latest update:

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European Fears Won’t Go Away – Continued Strain on Equity ETFs

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[Chart courtesy of MarketWatch.com]

The situation in Europe remains a drag on equity ETFs as markets fell further once more. The S&P edged down 0.85%. The NASDAQ has also been in quite a slump in comparison to the S&P 500 and Dow Jones index, dropping 1.26%. The 10-year Treasury also fell once more, dipping to a yield of 1.96%.

Most notably, the Euro continues to depreciate against the dollar, now hitting $1.30/Euro, its lowest point since January of this year. Although volatility was essentially flat today, there aren’t many positive telling signs that markets will swing into bull territory any time soon.

Evidence that agreement in Europe is quite hard to come by, Merkel dismissed the idea of increasing the size of the European Stability Mechanism (ESM), Europe’s permanent rescue bailout fund. Merkel balked at suggestions of combining the EFSF and ESM given the inability to leverage the financial firepower of the EFSF. In essence, little has been resolved despite the EU summit.

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