Thursday, November 20, 2008

Mini-November ETF Crash Update

[Chart Data Correction Posted] After today's seminal S&P drop to new lows not seen since the last decade, I thought I'd post my usual end-of-week ETF charts as an intermediate point of reference. Note that eleven out of eleven tracked sectors are highly oversold on multiple time frames.

This is extremely rare and indicates one form of capitulation in and of itself... we are seeing a complete throw away in every asset class but treasuries. A slight exception is Gold, which is just now starting to claw back as our nation prints money 24/7. A bottom? Probably not, but maybe soon.

With the VIX stretched more than +28% from its 15-day moving average (also extreme), insurance is far too expensive to purchase and even unlevered investors are left with no 'option' but to go to cash in this environment of unbelievable volatility.

The only saving graces? One, relative strength in value stocks for the first time in a long time [NOTE: I'm not sure what I was looking at when I wrote this - it's not true! Maybe my data was still goofed up. I'll leave it in as a notated honest error rather than being revisionist, which I find distasteful]. Two, commodities down over 15% in the last month. Three, bond yields far below equity yields (for now) and bonds are as overbought as stocks are oversold. Four, today's volume was quite strong. Five, if relative dollar strength can hang in there (probably optimistic), on a recovery -- domestic and foreign funds may find their way back to the US after an extended hiatus. Six, as we all know, there is a government sponsored reinflation attempt afoot. Admittedly, it's a short and hopeful list relative to what we face.

Next month I will be offering this sheet with many more interactive stats for over 130 ETFs on a daily basis (very nominal fee -- hey...). Email me if you are interested in beta testing the Excel spreadsheets (jgpietsch at gmail).

I don't care who you are, this is painful to watch and I can't tell you how much I feel for those nearing retirement. Sadder yet, I'm not sure who said it on CNBC today, but - "2008 is the year 'buy and hold' went to die." That's the state our economy/ country is in right now, but we've turned it around before and can do so again. Remain opportunistically pragmatic, and... hang in there!

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