02/03/2012 Don:

Q: Ulli: I am sitting with a nice profit with VEU and VNQ. 8-10% range. With the market widely fluctuating, at what point would one consider taking profits and buying back later?

I hate to see this disappear by having a 7% trailing stop should the market go down. I realize there may not be a perfect answer to this. Thanks for the excellent site.

A: Don: You are right; there is no perfect answer. My preference is to use trailing sell stops as my signal when to take profits or limit losses, whichever case it may be. If you’re happy with your current gains and are worried about giving them back, simply take them.

01/27/2012 GEH:

Q: Ulli: In these turbulent markets your ETF News continues to be a great source of information and guidance.

You clarify your Cutline reports with this comment:

“The second report includes only High Volume ETFs. To clarify, High Volume (HV) ETFs are defined as those with an average daily volume of $10 million or higher.

These ETFs are generated from my selected list of some 93 that I use in my advisor practice. It cuts out the “noise,” which simply means it eliminates those ETFs that I would never buy because of their volume limitations. 33 ETFs (last week 21) have managed to hang on in bullish territory after the recent volatility.”

By this, do you mean that you only buy ETFs that are on the High Volume Cutline Report? And if so why?

Do you use a similar guideline for Mutual Funds?

A: GEH: If you personally invest only smaller amounts of money, you can pretty much choose any ETF that appeals to you. As an investment advisor, I move larger amounts of client’s assets into and out of ETFs, so volume becomes a critical factor to me. It allows me to exit, when our sell stops get triggered, without too much slippage in price.

That’s not an issue with most mutual funds, but I still won’t use any with assets of under $50 million.

01/20/2012 David:

Q: Ulli: I have been following momentum on stocks and ETFs, in part by checking on the % greater than MA200. Some have reached 10% to over 20%. Do you have a rule-of-thumb on this to indicate that the stock is OVERBOUGHT?

Another parameter I have been looking at is HOW LONG the stock has been greater than MA200. Any rule-of-thumb here?

Another parameter is whether the % greater than MA200 is increasing rapidly, in particular, IF THE SLOPE HAS SUDDENLY INCREASED. Any rule-of-thumb here?

Last, I imagine that in each case above, one might need to take into account the OVERALL MARKET CONTEXT, i.e., trading range or strong bull or strong bear, and the sector context. Any rules-of- thumb here?

I am asking such a long string of questions because it seems obvious that a quick yes-or-no will not suffice.

Thanks again, as always.

A: David: No rules of thumb for any of your scenarios. I simply let the current momentum carry a fund/ETF to its eventual high point, from which a reversal will occur. If that reversal is strong enough, it will trigger my trailing sell stop and get me out of the market.

I attribute the various scenarios you posted simply to the volatility differences of a specific fund/ETF but have not seen a way to use that information in making better investment decisions.

Sorry, I can’t be of more help.

01/13/2012 Mel:

Q: Ulli: I’m not sure if my comment last week got through. I appreciate your blog greatly. I know that today you are saying that “for those wishing to make some equity ETF additions, now might be an opportune time.”

I understand that international ETFs are still off the table, but the TTI for domestic equity crossed up over the trend line in October. But as I have followed your blog, you seemed to be saying we shouldn’t follow that signal but stay in cash and bonds. Was that interpretation right? Do you advise domestic equity exposure now? Do you have a rough percentage in mind for equities vs. cash and bonds? Or are you still avoiding the equity market?

Thanks so much for your blog, and in advance for answering my query.

A: Mel: I have always favored bonds and cash along with some selected sector funds. I use the HV ETF Cutline report to make my selections from those ETFs that have crossed their trend lines to the upside. There are more to choose from now than a few months ago. The amount of allocation depends strictly on your risk profile. Have I increased some of my equity holdings? Yes, I have added exposure.

01/06/2012 Kent:

Q: Ulli: In taking positions in bond funds/ETFs, if bonds are in an uptrend, do you tend to enter bonds, pretty much at any point, and use the 5% stop rule to keep you out of trouble?

It appears that waiting for pullbacks might prove to be harder with bonds, at least in recent history, when they've been so strong. I'd be interested in your thoughts on this, when you get a minute, as my experience with bonds and bond funds is more limited.

Thanks!

A: Kent: Yes, you are correct. If you plan on buying a bond ETF, simply purchase it on a day when it's down. That's how I do it as I have not found a good way to buy on pullbacks.

12/30/2011 Maghar:

Q: Ulli: Why have you stopped updating the #7 portfolio as of 9/26/11?

A: Maghar: The #7 portfolio is the ETF equivalent of PRPFX. We got stopped out of it in September 2011 and have not reentered due to PRPFX having remained below its long-term trend line. In other words, that portfolio has been in cash since.

12/23/2011 Mark:

Q: Ulli: There has been so much talk about currency/dollar collapse and a global depression occurring very soon. Most are predicting hyper-inflation and say gold ( and a few other investments ) may be the best store of wealth, and the dollar and bonds are going to crash with most everything else.

They urge buying as much gold as you can as soon as you can. Then there are others who are predicting massive deflation. They say gold is going to crash with other commodities and the dollar is going to remain the safe haven. Large cyclical factors not the least of which is the aging baby-boom generation is driving a very long period of slow growth and deflation. Obviously, the choices one makes believing in one theory would be disastrous if the other turned out to be true.

I wonder if you agree with either or neither and have any thoughts of your own? Does your ETF strategy have the ability to prepare us for and see us through a depression? I don’t want to wait to the last minute to do something to prepare for the worst only to find out I have waited too long.

A: Mark: There are plenty of opinions; that’s for sure. It’s also a given that nobody can predict the future, so these are all wild or in some cases educated guesses. To me, it all boils down to trends. As we go forward, the simplest way to identify whether an asset class is worthwhile considering as an investment is by looking at my weekly Cutline reports, which are published every Monday morning.

They clearly identify if an ETF/mutual fund is in an uptrend or not. While that does not guarantee a successful investment outcome, it enhances your odds of being able to better evaluate as to which ETFs are rising and which ones are falling.

No matter whether we’ll have a bull market, a bear market, a recession or depression, trends tend to tell you what’s real amidst the onslaught of news and data, which always seem to cloud the clear vision.

12/16/2011 Ian:

Q: Ulli: Appreciate all you do and value your information more than any of the dozens of sites I get info from. My bond mutual funds have dropped significantly since August. These include PTTDX, FKINX and TPINX. I am looking for alternative bond ETF/ETN funds.

My dividend stock ETFs have done well for last 3 years. They are DVY, PFF, XLP and XLU. I am holding the bond funds but in looking for alternatives in ETF/ETN area; I have found nothing that compares to the dividend stock ETFs.

Am I wasting my time looking for other ETF/ETN bond type funds or just focus on the things I have that are working?

A: Ian: You have the right idea, just be sure to use my recommended trailing sell stop discipline should any of your positions go against you by too large a margin.

The markets have been on a roller coaster ride throughout 2011, as I detailed in today’s (12/10/11) post, which has made it very difficult to hold on to any positions for a longer period of time. With Europe being in upheaval, I expect that volatility to continue until their structural issues have been resolved—whenever that may be.

12/9/2011 Ian:

Q: Ulli: Thanks again for all your insights and wisdom you share with us neophytes. Would you be kind enough to use your current cutlist to explain which ETFs are worth buying, and your logic for such a recommendation? I really need to read your thoughts on how you parse the list and the criteria you use to determine which funds to purchase.

Thanks so much!

A: Ian: Much depends on your risk tolerance. I prefer buying back in when the domestic TTI is in bullish territory and when individual ETFs/MFs have also crossed their trend lines to the upside.

Take a look at Monday’s HV ETF Cutline report, and you’ll notice a few equity funds on the plus side. As an example, I have added a small position in DVY a few days ago, since it’s less volatile due to its dividend paying feature. There are several other ones and, as I have disclosed before, we have exposure in XLP as well.

Again, the final decision will have to be yours. I can only provide you with data to help the decision making process.

12/2/2011 Vicky:

Q: Ulli: So for the person who never understood bonds…if there is a flight to US Treasuries, which is probable at some point, will the bond ETF’s you are holding increase in their asset value or decrease (be worth more or less)? And why? Thanks.

A: Vicky: I treat bonds like any other asset class. I invest in them when their major trend is up and hope for more appreciation as the economy weakens and demand from flight to safety drives prices higher. I protect myself against downside risk via my 5% trailing sell stop discipline.