NEW YORK ( ETF Expert) -- At the start of May, 88% of stocks in the S&P 100 Index were above a long-term, 200-day trendline. Near the June lows, that number had fallen to roughly 50%.
In August, the exchange-traded vehicle for this index, the
iShares S&P 100
, hit new 52-week highs. Yet, it did so with less participation from the index constituents at 79%. What's more, on the eve of the European Central Bank's Thursday press conference, only 73% of stocks had closed above the key moving average.
These indications are far more indicative of fizzle than sizzle. Specifically, new highs achieved with fewer companies is rarely viewed as a positive development.
Most prognosticators believe the ECB and the U.S. Federal Reserve -- heck, all of the world's central banks -- will find a way to maintain the confidence of the investing public. Yet, there's a difference between keeping the confidence and continuously coming up with procedural steps that prevent pandemonium. Sooner or later, panic can creep back in.
Granted, at the moment, waiting for the markets to decline precipitously may be similar to waiting for Godot or Guffman. The big pullback may never show up!
Nevertheless, most of what can go right has already been anticipated. Everyone expected the ECB to eventually buy Spanish and Italian bonds. Everyone expects the Fed to eventually buy more Treasuries and/or more mortgage-backed securities. So the real question is... what will happen to financial markets if there's a hitch?
Mario Draghi spoke on behalf of the ECB on Thursday, unveiling an aggressive bond-buying program to help weak economies in Europe. Will it be enough? Meanwhile, the Bureau of Labor Statistics will report payroll data on Friday. What if the numbers aren't quite weak enough to justify more quantitative easing? Will stock investors sell riskier assets, fearing that Fed Chairman Ben Bernanke could kick the can rather than enact QE3?
While U.S. large-cap stock benchmarks could indeed continue to climb the "wall of worry," I am favoring
"risk-neutral" ETF assets
For example, traditional real estate investment trusts via
as well as the higher-yielding mortgage variety in
iShares FTSE NAREIT Mortgage REIT
are staples in many of my client portfolios.
I also remain
committed to yield producers
that have historically wide spreads with comparable U.S. Treasury bonds. The income-oriented assets in
Guggenheim Multi-Asset Income
remains attractive, as do the dollar-hedged emerging market bond ETFs
iShares JP Morgan Emerging Market Bond
PowerShares Emerging Market Sovereign
This article was written by an independent contributor, separate from TheStreet's regular news coverage.