ETF Update: Where Is The Bull Market?

Jim Cramer has popularized the statement, “There’s always a bull market somewhere.”  That is an underlying concept for our approach to ETF investing.  By maintaining a broad universe of choices, we are frequently able to move from one winning sector to another.  When conditions are optimal, it is like finding the best wave and riding the crest.

Sometimes, however, the surf is not up.  Sometimes our sector universe has positive ratings for only the inverse ETF’s ((SH), (DOG), and (PSQ)).  When this happens, as we noted last week, it is time to pay attention.  Our TCA-ETF system is always looking for new opportunities.  Since it acts not only on trends, but also on cycles, it may act more quickly than systems that rely strictly on trend.  (For new readers, there is a more complete description of our methods and ratings at the end of the article.)

Where is the Bull Market in ETF’s?

Some investors are poised to seek out buying opportunites.  For many months, any buying foray has been an instant loser.  The stock market decline has affected all sectors and asset groups.  Most recently, even gold has pulled back.

Tom Lydon of ETF Trends advises investors not to try to find the bottom.  He recommends waiting for an uptrend before acting.

Gary Gordon at ETF Expert has some reasons that ETF’s might turn up in March.

Our own series on the struggle to find a bottom in the market has so far covered economics and political factors.  We plan two more articles on valuation and technical analysis.

Meanwhile, the TCA-ETF system is waiting for more evidence.

Weekly TCA-ETF Rankings

All three of the three inverse ETF’s are in the buy zone, and all other sectors remain in  the penalty box.  Our weekly program gained about 3 percent last week while the market declined nearly 7 percent, so it was a good week for relative performance.

We do much better on an absolute return basis when there are many sector choices, so we look forward to a market turn.  We also expect to experience some losses at the turning point.  We have continued our bearish stance in the Ticker Sense Blogger Sentiment poll.  There are only three of 57 sectors in the “buy” range, and they are all inverse ETF’s.

Unlike most observers, we still think this could change rapidly with a really solid plan for troubled assets or a change in mark-to-market accounting.  There are hearings scheduled on the accounting issue this week, but it is an early stage of the legislative process.

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