iETF and sETF rankings update, 10/07/2008

Rankings of Average Momentum Index(AMI) for iETF and sETF have been posted at : http://yechen.pan.googlepages.com/

Trading signal occurs in sETF model portfolio: Sell IBB, Buy CASH.

Since this bear market is similar to 2000-2002 bear market, let's review the monthly chart of IVV for the past 10 years. IVV is an iShare exchange traded fund mimicking S&P 500 index. The 2000-2002 bear market was attribute to the burst of .com bubble. The price of IVV went down from its high of $152 in August 2000 to the low of $80 in September 2002. It lost 47% of its value in the span of 2 years. The monthly stochastic dipped below 50 in Nov. 2000 and stayed below 50 til July 2008 when it climbed above 50 and confirmed the long term bull market.

Figure 1

This bear market started in October 2007 due the burst of housing bubble. The housing problem rippled through financial sectors and affected the whole economy. The long term bear trend was confirmed in February this year when IVV's monthly stochastics fell below 50. This bear is now one year old and have lost 32 % so far. We do not know how long it will last and how low it will keep going down. The next bull market will not come until the monthly stochastics climbs above 50 again.