Equity ETFs Get Spanked – Domestic Trend Tracking Index (TTI) Remains Above Its Trend Line

If you were still fully invested in equity ETFs this morning, after the markets opened, this was indeed a very long day for you.

The indexes slipped right out of the starting blocks and never looked back, as relentless selling pushed the major market ETFs to their worst one-day loss since December 2008.

Worries persisted that the U.S. economy will slide back into a recession which, to my way of thinking, is pretty much a sure thing. Concerns that the Fed will not engage in Quantitative Easing to boost the economy again, helped the bearish cause. Adding more uncertainty was the worsening European debt crisis, which seems to spread despite the various rescue attempts.

All this added up to a perfect storm for the bearish crowd.

While the markets have now entered officially correction mode (more than 10% off the top made on April 29, 2011), our Domestic TTI (Trend Tracking Index), has remained above its trend line, but barely.

Here are today’s numbers:

Domestic TTI: +0.57%

International TTI: -8.41%

S&P 500’s 200 day M/A: -6.60%

Even though our domestic TTI is still hovering in bullish territory, if you followed my recommend trailing sell stop discipline, you should no longer be holding any domestic equity funds/ETFs anyway.

All eyes are now feasted on tomorrow’s jobs report. If the numbers turn out really bad, I have to wonder if some early “leakage” contributed to today’s ferocious selloff.

Our core holding PRPFX declined a more modest 1.96% during today’s drubbing, while its ETF equivalent gave back 1.8%.

Be sure to look for this Sunday’s post, when I review the possibility of hedging PRPFX, when the time comes, as opposed to selling it. Stay tuned!

About Ulli Niemann

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