ETF/No Load Fund Tracker Newsletter For Friday, September 16, 2011
ETF/No Load Fund Tracker StatSheet
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Friday, September 15, 2011
FROM SELL-OFF TO REBOUND
The prior week’s sell-off is now only visible in the rear view mirror, as the Major Market ETFs put the pedal to the metal and rallied for 5 straight days. As I have commented throughout the week, the upper end of the past months trading range for the S&P 500 (1,220) came into play today, as the index touched but did not break through that resistance point.
While worries about Europe were shelved for most of the week, which provided the fuel for this rebound, fears crept back into the market as a meeting of finance ministers in Poland showed no progress. The only agreement was that they agreed to meet again in October to determine whether Greek will receive the next bailout payment. The irony is that it’s not certain whether Greece will even need the money by then; their government may have run out of cash long before that…
I don’t know about you, but I am starting to suffer from bail out exhaustion. You don’t have to be an economist to figure out that Greece will default sooner or later. Why continue to pretend and extend? It’s far better for everyone involved to get it over with, stop the senseless bailouts and have world stock markets correct to whatever degree so that the rebuilding process can begin.
In any event, I don’t control these issues, so I have to deal with the fact that we have reached the upper end of the trading range. If it holds and breaks through that level, I will have to issue a domestic ‘Buy’ signal as the Domestic TTI (Trend Tracking Index) has remained on the bullish side of the trend line long enough. Here are today’s closing numbers:
Domestic TTI: +2.25% (last week +0.71%)
International TTI: -9.37% (last week -12.03%)
Since the news contains predominantly “all Europe all the time,” domestic issues can get lost in the shuffle. That was the case today, as the University of Michigan said that consumers’ economic outlook was at levels not seen since 1980. That’s not encouraging, especially since the consumer and his spending habits account for 2/3 of all economic activity.
With a little pick up in uncertainty today, gold finally managed a rally, but ended up closing down 2.4% for the week, while the equity ETFs gained handsomely, as the S&P 500 added 5.4%. Despite this week’s rebound, the major indexes remain in negative territory YTD.
From my mat, it appears that the rally was overdone and some sense of reality is bound to hit the markets, once this week’s euphoria about Greece having been saved wears off. Again, none of the issues that are of grave concern to the EU have been resolved. They have merely been pushed aside, and the markets ended up playing along.
I am sure we will be inundated with the latest and greatest Greek and other rescue attempts next week, but I am curious as to not if but when the fact that it’s all an exercise in futility will finally matter to the markets.
Have a great week.
READER Q & A FOR THE WEEK
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A note from reader Mike:
Q: Ulli: Thank you for the great service you offer on these free portfolios…
How can one start, the # 7 PRPFX equivalent portfolio? Would appreciate very much your general guidance.
A: Mike: There is not much I can recommend since you are not a client, and I don’t know your particular circumstances. You need to invest according to your risk tolerance. I’ve just done a video on that; it’s not official yet, but you can preview it here:
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