With Wall Street’s big guns having returned from their summer vacations, it was time again to push the buy and sell buttons. Today, despite low volume and short covering, the sentiment was bullish. Our Trend Tracking Indexes (TTIs) are now positioned in regards to their long term trend lines as follows: Domestic TTI: +3.65% International TTI: +2.51% I can no longer ignore the fact that the international TTI has now moved solidly above the line so, effective tomorrow, Wednesday, I will move back into that market. Depending on portfolio size, I will use an allocation to broadly diversified international funds/ETFs of anywhere from 15% to 30%. As always, I will set my trailing sell stop at 7%.

Continued bad housing news, and lingering credit problems along with dimmed hopes for an interest rate cut, pulled the major market indexes lower. Our Trend Tracking Indexes (TTIs) retreated as well but are remaining above their respective trend lines as follows: Domestic TTI: +3.34% International TTI: +1.59% Today, I ventured back into broadly diversified international funds, as announced yesterday. Because of the proximity of the International TTI to its trend line, I will use the 7% sell stop point of my new fund holding as my exit strategy. This will allow me to give the market some room to move and will hopefully avoid a whip-saw signal in case the International TTI heads south again. I will keep you posted as to any changes.

After the markets meandered for most of the day, I liquidated 2 positions that had dropped off their highs by -7.5% as announced yesterday. Of course, I had no idea that my trades were so influential that they confused Wall Street traders and promptly ignited a strong rebound rally during the last hour. While all major indexes closed higher, it was clearly a party of one, as the Dow was the king of the Street for today. If this feels like a roller coaster to you, you are not alone. Increased volatility may stay with us for a while and is an indication that the market is in a shakeout mode. That simply means that future direction is uncertain and a break either way can occur at anytime. For tomorrow, none of my other sell stops have been triggered, so I will watch and wait.

Yesterday’s rebound, which recovered just amount all of last Friday’s losses, was a welcome relief but huge one day market moves, whether up or down, are rarely indicative of a trend. As I mentioned last Friday, I liquidated a few volatile positions with sector and country orientations. The sell stop points were clearly penetrated and, if this is in fact only a temporary bounce, we’ll be glad to have taken some volatility out of our portfolios. If this rebound turns out to be the resumption of the long-term trend, we’ll be looking for other opportunities. Right now, I prefer to err on the side of caution. Our Trend Tracking Indexes (TTIs) recovered as well and remain above their long-term trend lines as follows: Domestic TTI: +2.61% International TTI: +2.53% Most of my domestic and international positions have stayed above their sell stop points, and I will hold them until market activity tells me otherwise. All eyes are now on the Fed for any hint that they are willing to throw an assist should the markets need it. Well, even the “Donald” (as in Trump) has thrown his name into the game on CNBC as he called for a rate cut. Hmm, he just can’t stand not being in the limelight.

Today’s steep sell off (based on the continued spread of the subprime virus) did not affect any of our sell stops. Since I had liquidated some of our more volatile holdings in some country and sector funds last week, we are left with positions that have been fairly stable. Most of them have come off their highs by 4%-5%, which means there is still a little “play room” until the 7% sell level gets triggered. Our Trend Tracking Indexes (TTIs) rallied early in the week and are, as of today, positioned in regards to their long-term trend lines as follows: Domestic TTI: +2.54% International TTI: +3.07% We will hold all positions subject to our sell rules.

Another steep sell off has moved our Trend Tracking Indexes (TTIs) within striking distance of an all out Sell signal. As of today, the TTIs are positioned in regards to their long-term trend lines as follows: Domestic TTI: +0.87% International TTI: +0.34% Over the past few weeks, I have been liquidating those holdings that have triggered our sell stop points, and I will eliminate a few more tomorrow. My guess is that by the time we receive an all out Sell signal, we will have moved most of our assets to the safety of the money market accounts. With the subprime fallout taking more prisoners almost daily, interest sensitive instruments like tax-free ETFs have been shook up as well. It seems that there currently is no orientation that is exempt from catching the down draft. I have started and will continue to liquidate those positions that have performed the worst. If necessary, I will post more updates after the close of the market on a daily basis.

Yesterday’s sell off continued today in the face of a rally attempt that ended up giving the bears the upper hand. As of today, the Trend Tracking Indexes (TTIs) are positioned in regards to their long-term trend lines as follows: Domestic TTI: -0.10% International TTI: -1.30% The domestic TTI barely crossed to the downside, so the risk of a reversal back to positive territory certainly exists. I will therefore continue selling only those remaining domestic equity funds/ETFs that have dropped through their sell stop points, but will hold off with an all-out Sell until the TTI confirms its position by staying below the trend line over the next day or two. The story is different with the International TTI, which has clearly broken through to the downside by -1.30%. This signals a Sell for all broadly diversified international equity funds, and I will liquidate the one remaining position I still have. Should market action warrant a daily update, I will do so and hope to have it posted by 4 pm PST.

Many people like to travel to places like Las Vegas for life changing experiences or to live on the edge—at least for a few days. If you have that tendency as well, you were in luck this week. All you had to do is turn on the financial markets and you would have gotten more than your monies worth of excitement. Especially today proved again that using intra day stop loss points is simply not a good idea as I posted about before. The Dow was down over 340 points at one time but a last hour rally along with short covering turned this potential disaster day into a non-event, if you go by closing figures. Even in my post this morning, I could not see a recovery from my vantage point. Well, that tells you that assumptions should simply not be made. I also mentioned that the closing of the gap can sometimes signal a turn in market direction. While it’s too early to tell, it now appears to be at least a possibility. Today’s effect on our Trend Tracking Indexes (TTIs) was very small, but the domestic TTI moved back into positive territory, while the international TTI headed further south: Domestic TTI: +0.23% International TTI: -1.91% As announced yesterday, I sold my last international holding, but will hang on to my remaining domestic positions subject to my sell stop or the domestic TTI’s further move below its long term trend line; whichever occurs first. If you’ve sent me an e-mail, you’re not the only one. It will take me a few days to catch up, so please be patient

Yesterday’s market activity had no effect on our investment plans despite the ever present volatility. I am in still in a holding position waiting for the markets to decide on future direction before making any further adjustments. The Trend Tracking Indexes (TTIs) are situated relative to their long term trend lines as follows: Domestic TTI: +1.47% International TTI: -0.74% I did liquidate a few of our tax-free closed end fund holdings since some of them had declined beyond what is acceptable, which was caused by the credit crunch (interest rate gyrations) from the subprime fallout.

Yesterday’s market bounce, although on low volume, was a step in the right direction. It’s too early to tell if this is the beginning of another uptrend or just a head fake. Many traders are still on vacation and will not be back to their desks pushing buy and sell buttons till after Labor Day. Until then, any moves to the upside or downside may not have much meaning. The Trend Tracking Indexes (TTIs) are now situated relative to their long term trend lines as follows: Domestic TTI: +2.30% International TTI: +0.46% As you can see, the International TTI recovered and barely broke back above its long term trend line. To avoid a whipsaw, I will hold off making any commitments in that arena until I can better determine if this is a sustainable trend or simply sideways action. I am looking at some sector opportunities and may make some investments in those areas that have best withstood the recent sell off.