ETF/No Load Fund Tracker Newsletter For Friday, September 23, 2011

ETF/No Load Fund Tracker StatSheet




Market Commentary

Friday, September 23, 2011


What a difference a week makes. Last Friday, the major indexes had finished managing a tremendous rebound, only to see it evaporate, and then some, during the past 5 trading days, with the S&P 500 giving back -6.58%.

The interesting part during this world wide sell fest was that many big players were forced to liquidate positions to raise cash and to meet margin calls, which pulled the rug out from under the commodities sector.

Especially hard hit were gold and silver with gold falling 9.6% for the week and silver dropping an astonishing 26.3%. The flight to safety did include predominantly U.S. Treasuries and the U.S. dollar. For more specific market commentary, please review my daily blog entries.

Since gold and silver represent about 25% of our core holding PRPFX, that fund got clobbered at a rate of -6.23%, almost matching the S&P 500. PRPFX has now come off its high by -7.69%, which puts us into sell territory, a position that I have not seen with this fund since the middle of 2008.

Barring any huge rebound in the metals early next week, I will reduce our exposure to PRPFX; some holdings will be sold 100%, and others be reduced or possibly hedged, depending on a client’s risk tolerance.

I would have expected gold to be one of the few asset classes that are sought out during times of turmoil, but apparently not this week. We may see resurgence in gold in the future, but that is guess work at this time. Right now, the bulls are simply comatose.

Our Trend Tracking Indexes (TTIs) confirm the move deeper into bear market territory, as today’s closing numbers show:

Domestic TTI: -0.32% (last week +2.25%)
International TTI: -14.07% (last week -9.37%)

While the Domestic TTI hovers in bear territory, it has only crossed the line by a fraction of a percentage. With the European debt situation showing no signs of improvement, it’s only a matter of time before a serious event takes place and further affects world markets.

That is the moment in time where I would expect gold to become the “uncertainty play” again. However, there is no guarantee that this will happen, as current events confirm to me that we indeed have entered unchartered territory.

Thus, the best rule I can share with you, if these lower market levels tempt you to do some bottom fishing: “If in doubt, stay out!” That goes right along with “I’d rather be out, wishing I was in, then being in, wishing I was out.”

Have a great week.




All Reader Q & A’s are listed at our web site!
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A note from reader Americo:

Q: Ulli: What is the trailing stop for the fund PRPFX? I agree with you that it is a great fund for any situation.
A: Americo: Well, it’s good for “almost” any situation. The sell stop is 7% off its high since you bought it.



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About Ulli Niemann

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