Update for Friday, February 5, 2010

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This week's hot topics are:

1. "Going Sideways For 5 Years?"

2. "Reader Q+A: More Sell Stop Clarifications"

3. "The Best Laid Plans"

4. "Does The Bull Still Have Room To Run?"

5. "Traveling"

6. "Market Top?"

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THE LINK TO OUR CURRENT MUTUAL FUND/ETF STATSHEET is:

http://www.successful-investment.com/StatSheet/SS020410.htm

This StatSheet is updated through Thursday, February 4, 2010.
The next scheduled update will be Thursday, February 11, 2010.

Friday, February 5, 2010

STOCKS BUNGEE-JUMP BACK

After Monday and Tuesday's advances, the bears stepped on the accelerator on Thursday and put the brakes on a nice comeback, which wiped out all gains and then some. It could have been a lot worse as the markets headed south today in what was shaping up to be a bloodbath with the Dow being down some 170 points at one time. Fortunately, strong buying in the last 1-1/2 hours lifted the major averages from the abyss, and we actually closed slightly to the upside.

Over the past few days, I took the opportunity to sell those funds/ETFs that had clearly pierced their sell stop points. One of the culprits of much of this downside activity were renewed worries about trouble in Euro land. The possibility of one of the PIGS (Portugal, Italy, Greece, Spain) defaulting on their debt remains a serious concern despite much jawboning to the contrary.

We now have removed much of the volatility from our portfolios and are holding on to those positions that have remained above their sell stop levels. Interestingly, as I posted in my blog recently, international funds/ETFs have gone down faster than their U.S. siblings. This is supported by the international TTI (Trend Tracking Index) now having surpassed the domestic TTI on the race towards their respective long-term trend lines. Here is where we stand in that regard:

Domestic TTI: +2.59%
International TTI: +0.84%
Hedge TTI: -1.56%

However, by the time the trend lines get actually pierced to the downside, which will move us back into bear market territory, we will have long sold most positions as sell stops usually get triggered before the trend lines get penetrated.

Today's jobs report caused some mixed feelings as well. While many try to put some lipstick on that pig, I think it was terrible. Not only were additional jobs lost, although gains were expected, but the revisions for the previous month were far worse than assumed. With an average workweek of only some 33 hours, employers have lots of latitude to increase these hours before hiring new personnel.

Three triple-digit full-day moves caused much anxiety and nervousness in the markets. I am comfortable having lightened our holdings and will pull the trigger on others, should it become necessary. If this turns out to be a whip-saw, I will re-evaluate and ease back into additional holdings. Right now, the downside risk has increased, and it will not take much of an adverse event to push us back into bear market territory.

Have a good week.

Ulli...

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Until next week.

Ulli...

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Ulli G. Niemann
Registered Investment Advisor
714.841.5804 Toll free: 866.580.6764
http://www.successful-investment.com
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