ETF Update: What A Difference A Week Makes!

It was only a week ago that we found No Sectors to Buy in the ETF universe.  The picture has changed swiftly and dramatically.  There are now many choices in our “buy” range.  The signal strengths are solid and getting better.

It is a surprising result in a week when the S&P 500 (^GSPC) declined by almost 4%.  We have a lot of respect for signals in many sectors from our TCA-ETF model.  These are discovered through examination of Trends, Cycles, while using a touch of Anticipation.

Looking for the best sectors to buy, we were a bit surprised at the results.  That is what a model should do - alert you to opportunities that you might not see on your own.
Featured Sector:  Back to Russia

Our top-rated ETF is the Market Vectors Russia ETF (RSX).  This is a very pure play on Russia, so it has a lot of volatility, with a relatively low (.5) correlation to the S&P 500.

When this ETF last reached the top of our ratings in May, we noted that it was a closet energy play.

We also cited Tom Lydon, writing about the link between Germany and Russian development.

The current status for RSX includes a massive decline this year, noted by Jordan Kahn, and the rebound in emerging markets cited by Charles Kirk.  Tom Lydon analyzes some of the political fundamentals, writing about President Dmitry Medvedev’s recent speech as follows:

Most of the speech was spent talking about politics in Russia instead of the economy, which is what happens to be on the minds of most Russians. What this stance is going to mean for the country down the line is open to debate. Russia faces a number of challenges if they ignore their own economy, especially in light of its dependence on oil, as Obama is pledging a commitment to the alternative energy industry.

Can Russia keep up with the rest of the world?

This is obviously a high-volatility play — big potential reward, but significant risk.

The model does not do “bottom fishing” so the ratings reflect an improved outlook based upon technical criteria, including consideration of both trend and cyclical behavior.

Weekly TCA-ETF Rankings

We have been out of the market for many weeks in our sector rotation fund, since the charter is basically long only.  Last week we bought a 40% position in general index funds because of the signal from our Gong Model.  We started getting actual sector signals at mid-week, so we replaced the SPY (SPY) and QQQQ (QQQQ) positions with ETF’s.

The prices listed below are based upon Thursday’s close, so they miss the nice rebound on Friday.  (The buy in IEO on 11/10 is a typo, a rare error from our excellent staff.  We’ll fix that next week, and thanks to reader RK, who subscribes to our email list.)  When the market is making 5%+ moves in a single day, timing is difficult!

Based upon the current ratings, we have moved to a bullish vote in the Ticker Sense Blogger Sentiment poll to “bullish.”  This is the first time that we have had a bullish stance since August 18th.

We are very happy with the model signals, and especially the long period of safety during a slow-moving market crash.  For readers interested in our program, we have a long-only method and one that embraces more market timing.  Current reports are available to any interested reader — both the TCA-ETF method and the Gong Model.

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