The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK (

ETF Expert

) -- Foreign stocks returned to their winning ways in the first 10 weeks of 2012. By mid-March, however, economic data out of China started to demonstrate sluggishness. A rapid rise in Spanish bond yields began threatening the country’s ability to manage its own finances. And European

interbank lending ground to a halt

.

Nevertheless, as recently as Tuesday, May 1, many commentators were giddy about U.S. stock gains. After all, the

Dow

had just hit a peak not seen since December of 2007.

Perhaps ironically, the U.S. stock market finished the first week of May with its worst showing of the year. The

Dow Industrials Trust

(DIA) - Get Report

gave up -1.5%, the

S&P 500 SPDR Trust

(SPY) - Get Report

slid -2.4% and the Apple-powered

PowerShares NASDAQ 100

(QQQQ)

plummeted -3.8%.

Most of the news outlets are blaming weak U.S. employment data for April. Yet unemployment claims had fallen to a one-year low just a day earlier. Should the media really blame deceleration in U.S hiring alone? What about the “sell in May and go away” phenomenon? Or could it be the basic desire to realize profits after a spectacular seven-month run?

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In truth, it may simply be too far-fetched to think that U.S. stocks can completely decouple from the rest of the world’s markets. The idea that the

iShares MSCI Spain

(EWP) - Get Report

fund could notch a 52-week low at the same time that the Dow Industrials Trust could register a 52-week high flies in the face of previous risk rallies. The same can be said for the

simultaneous success of the iShares 7-10 Year Treasury Bond Fund (IEF) - Get Report

.

So what should you do next? Cut-n-run? Hold-n-hope?

The good news is… your decisions do not need to come from a place of raw emotion. For example, my colleague Rob Charette recently brought a lesser-known technical trading term to my attention; specifically, an investor can quantify the direction of a trend by determining its slope. A positive slope expresses an uptrend whereas a negative slope describes a downtrend.

If we apply the mathematical construct of slope to

Vanguard Total U.S. Market

(VTI) - Get Report

for a 50-day period, we see that the uptrend remains intact. (See the chart below.) Of course, a positive reading of .02 isn’t exactly a ringing endorsement, but it is a near-term uptrend nonetheless.

VTI 50 Day Slope

In contrast, all-world ETFs from

Vanguard All World

excluding U.S.

(VEU) - Get Report

to

iShares MSCI All World excluding U.S.

(ACWX) - Get Report

paint a different picture. The negative slope reading of -.04 over the 50-day time frame defines a near-term downtrend for foreign stocks. What’s more, the current price of VEU is well below a 50-day moving average.

VEU 50 Slope

For our clients, we’ve had negligible exposure to developed world equities outside the U.S. since 2010. Yet we’ve used

stop-limit loss orders and trend identification

to reduce our exposure to emerging (developing world) stock ETFs here in 2012.

Indeed, U.S. equities are the premier “hold” at this moment. We still maintain our positions in

Vanguard High Dividend Yield

(VYM) - Get Report

,

Vanguard REIT ETF

(VNQ) - Get Report

and

Vanguard Dividend Appreciation

(VIG) - Get Report

.

Yet the best investments… and I’ve been saying this for more than a month now… may be those ETFs with historically wide yield spreads with comparable Treasury bonds.

SPDR Barclays Corporate High Yield

(JNK) - Get Report

),

JP Morgan Alerian MLP

(AMJ) - Get Report

,

Claymore Multi-Asset Income

(CVY) - Get Report

and

iShares Intermediate Corporate Credit

(CIU)

continue to produce income with less price volatility.

You can listen to the ETF Expert Radio Show "LIVE", via podcast or on your iPod. You can follow me on Twitter

@ETFexpert

.

Disclosure Statement: ETF Expert is a website that makes the world of ETFs easier to understand. Gary Gordon, Pacific Park Financial and/or its clients may hold positions in ETFs, mutual funds and investment assets mentioned. The commentary does not constitute individualized investment advice. The opinions offered are not personalized recommendations to buy, sell or hold securities. At times, issuers of exchange-traded products compensate Pacific Park Financial or its subsidiaries for advertising at the ETF Expert website. ETF Expert content is created independently of any advertising relationships. You may review additional ETF Expert at the site.

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