(To see how we track ETF’s go to www.etfdiscipline.com.)

After topping at 2205 yesterday, today’s COMPQ dropped back to 2185 on weak economic news, and then ground its way back to close .27% higher at 2203, corresponding to a 30-point gain on the Dow. We liked this action. The market shrugged off an initial mild reaction to the news (-25 Dow points) to recover. Half the sectors were in the green. Banks, the Internet, Gold, and insurers were the strongest. Among ETF’s XME, KOL, MOO, EWZ, and XLB were up over 1%.

We regard the action as a mild positive shift in sentiment, as the market works through historical resistance from the 2008 crash. Eventually, there will be no stock for sale at these prices and we’ll get a jnice move. The news may not cooperate near-term, however, as some analysts are forecasting a second dip in the economy.

In any case, we are fully invested. We even bought GLD. We don’t know where it’s going, but when it turns around, our put order will trigger and if it keeps going down, we’ll sell GLD and hold the put.

We have a new market concern: China floating the yuan. This probably won’t happen for a few months, and they probably will not go to a full float instantly. But when it happens, it will unhinge the falling dollar from rising stocks, and cause foreign ETF’s to take a hit. The announcement will probably come as a surprise.

Regards,

 Paul