7 ETF Model Portfolios You Can Use – Updated through 11/29/2011

Ulli Model ETF Portfolios Contact

The markets as measured by the S&P 500 remained pretty much unchanged since last week’s report, with our portfolios moving only slightly.

Market direction has dictated for us to be predominantly in bond ETFs as the risk of equities being negatively affected by the developments in Europe has greatly increased. With no tangible solution to the debt crisis being on the table, I have to wonder how long major market  ETFs can remain at these levels.

Of course, any prospective good news out of Europe, whether sensible or not, will support the bullish scenario, but very likely only on a short-term basis.

Our domestic Trend Tracking Index (TTI) has inched back above the line into bullish territory by +1.01% after having dropped below it last Friday. This move is not sufficient yet to look for new exposure in equities to rebuild our very skinny portfolio positions.

Capital preservation remains my main theme during these times of great uncertainty.

Take a look at the latest update:

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ETFs Go Flat After a Huge Day – Are We In a State of Funk?

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[Chart courtesy of MarketWatch.com]

Perhaps investors came to the realization that all is not well in Europe as markets simmered down. The S&P 500 inched up only 0.22% while Europe and Asia posted marginal gains as well. The dollar still remained at $1.33/Euro, and commodities bumped up a little.

Also, the VIX fell once again, dropping 4.64%, though still above the 30 level. Some risk has been shaved off, but we’re still in risk on mode. There’s plenty of volatility hanging around as Europe’s fate is up in the air. Equity ETFs simply aren’t very tempting at the moment in this type of environment.

Meanwhile, it looks like Europe will require serious help from the IMF as EFSF expansion plans have been faltering. However, there was a statement saying that the EFSF will insure 20-30% of investor losses and plans on intervening in markets next month. Unsure of whether they can leverage the EFSF to over $1 trillion, most European leaders concur that IMF assistance will be necessary to aid countries overburdened with debt.

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Big Surprise to the Upside for Major Market ETFs, But Not For Long

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[Chart courtesy of MarketWatch.com]

It was a surprisingly joyous day for equity ETFs as global markets rebounded from last week’s rough patch. The S&P 500 roared back, finishing up 2.92% while in Europe, the DAX had a huge day by rising 4.60%. However, the dollar remained at $1.33/Euro.

Regardless, I view today as a mere blip and that market pessimism will soon return. There’s still too much uncertainty to bring markets right back down as we witnessed last week. I mentioned Friday that the possibility of a shift back into rebound mode existed, and that is what happened. The markets were way oversold causing the bounce, which then was supported by short covering as Art Cashin points out in “Sitting on the Edge.”

While markets were in bliss today, the long-term outlook remains dour. Moody’s has not only forecasted a recession scenario in Europe with more ratings downgrades, but a higher probability of multiple countries defaulting that could led to a Eurozone breakup if the debt crisis continues at its current rate. This is not out of the question given the acceleration of contagion as evidenced by skyrocketing bond yields.

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ETFs/Mutual Funds On The Cutline – Updated Through 11/25/2011

Ulli ETFs on the Cutline Contact

Below are the latest ETF Cutline reports, which show how far above or below their respective long-term trend lines (39 week SMA) my currently tracked ETFs/MFs are positioned.

The first report covers the ETF Master List from Thursday’s StatSheet and includes 397 ETFs, of which currently 24 (last week 45) of them are hovering in bullish territory.

The second report includes only High Volume ETFs. To clarify, High Volume (HV) ETFs are defined as those with an average daily volume of $10 million or higher.

These ETFs are generated from my selected list of some 90 that I use in my advisor practice. It cuts out the “noise,” which simply means it eliminates those ETFs that I would never buy because of their volume limitations. Only 5 ETFs (last week 9) have managed to hang on in bullish territory after last week’s drubbing.

The third report covers Mutual Funds on the Cutline. There are currently 23 (last week 34) above the line and 839 below it out of the 862 that I follow.

Take a look:

1. ETF Master Cutline Report

2. ETF High Volume Cutline Report

3. MF Cutline Report

Last Week In Review: ETF News And Blog Posts To 11/27/2011

Ulli Market Review Contact

In case you missed it, here’s a summary of the ETF topics and market reviews I posted to my blog during the week ending on 11/27/2011.

Another drubbing during the holiday shortened week pushed the S&P 500 down by -4.7% with the Domestic Trend Tracking Index (TTI) sliding into bear market territory by a scant -0.42%.

As I posted on Friday, I will watch market activity for a day or two to determine if this move below the line holds, before issuing the final domestic ‘Sell.’

Europe’s debt crisis is worsening and options to solve it seem to disappear by the day. Despite many news stories pointing out that the U.S. is somewhat insulated, I simply don’t agree and believe that domestic markets are living on borrowed time and will be severely affected by any Black Swan event coming out of Europe.

This week, we covered the following:

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Europe’s Reaching the Point of No Return

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While many of us may been indulging in tasty Thanksgiving trimmings, Europe’s been starving for financial help. As Italy’s bond yields surpassed above 8% while Spain looks to follow the same fate, it is clear that the contagion is spreading faster than anticipated, moving from the periphery into the core of Europe. Germany’s lackluster bond auction earlier this week and Belgium’s downgrade are clear evidence of this development.

With unsustainable debt levels, Italy and Spain at the very least will have to restructure their obligations. Austerity simply isn’t enough and will only lead to a greater economic contraction that will have a ripple effect across global markets. In other words, there is nothing positive coming out of Europe.

For now, below is a Bloomberg interview on how Europe can try to get out of this mess. Let’s brace for what might be an upcoming tumultuous week.

http://www.youtube.com/watch?v=i2ydpvRXCNI