Equity ETFs Get Slammed – Domestic Trend Tracking Index (TTI) Slides Into Bear Market Territory

There was no place to hide as global markets got slapped with the bears in firm control of market direction.

Our Domestic Trend Tracking Index (TTI) finally succumbed, after dancing around its trend line last Friday, and sliced clearly into bear market territory. Here are the latest numbers after the close today:

Domestic TTI: -2.42%

International TTI: -13.18%

S&P 500 200 Day M/A: -12.98%

This means, if you track major trends in the market place, we have now officially entered bear market territory, and no equity ETFs/funds should be held.

If you followed my recommended sell stop discipline, you sold your equity ETFs/funds some time ago, as their trailing sell stops got triggered, and this now merely is a confirmation of the recent downward trend.

For comparison, the S&P 500 lost -6.66% today, while our core holding PRPFX gave back a modest -1.26%. Given the fact that in my advisor practice we are on average invested in PRPFX with 66% of portfolio value, today’s market nightmare affected our bottom line by only -0.8%, which is hardly worth a discussion.

Nevertheless, I will be preparing our hedges for PRPFX, as discussed last Sunday, since more volatility is sure to stay with us for a while. If you look at the chart above (courtesy of MarketWatch), you’ll notice that the S&P 500 closed at its lows for the day, which does not bode well for tomorrow’s opening.

Due to other obligations, I will not be able to produce tomorrow’s Mutual Fund Cutline report, but will resume with Wednesday’s posting of the 7 ETF Model Portfolios. With the steep drop, missing an issue of the Cutline report is not critical, since you should not be invested anyway at this time.

Was there anything positive in today’s market crash?

Yes, here’s one investment suggestion from John Mauldin, who quipped in his latest newsletter that “maybe you want to go long Kimberly Clark, as they make Depends (the adult diapers here in the US, for my non-US readers), because sales are going to skyrocket all across the financial markets.”

About Ulli Niemann

Ulli Niemann is the publisher of "The ETF Bully" and is a Registered Investment Advisor. Learn more
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