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 ( TheStreet) -- A few months ago I wrote about what was then a brand new product line of funds from Royal Bank of Scotland ( RBS) that takes defensive action within the portfolio. The RBS US Large Cap Trendpilot ( TRND) switches from 100% exposure in the S&P 500 to 100% T-bills when the S&P 500 goes below its 200-day moving average and the RBS US Mid Cap Trendpilot ( TRNM) switches from 100% exposure in the S&P 400 to 100% T-bills when the index goes below its 200-day moving average.

The big idea is that these funds, that actually are exchanged-traded notes which are an unsecured debt obligation of RBS, go along for the ride of the broad market for the majority of the stock market cycle but then offer protection at the end of a cycle when the bull phase gives way to the eventual bear.

Specifically, both funds will switch from replicating equity exposure to replicating T-bills when the respective benchmark equity index goes below its 200-day moving average and stays there for five consecutive days. The recent events influencing the stock market have taken both Trendpilots into defensive mode earlier this week. Both ETNs will continue to replicate T-bill exposure until each respective equity benchmark takes back its 200-day moving average and holds it for five consecutive days.

The current event in the stock market that has taken both indices down is either the real deal -- a bear market - or it isn't and, of course, no one can know until after it is over. The uncertainty creates indecision on the part of many investors, but the Trendpilot products remove the variable of emotion that goes with indecision. If the market ends up going down a lot then clearly holders of the Trendpilot will avoid the decline from here.

It is worth noting that the five-day rule was not triggered until the S&P 500, and also the Large Cap Trendpilot, had dropped 15% and for some people that would not have been good enough.

One byproduct of the current event in stocks has been the skyrocketing of gold. It went above $1,800 ounce briefly before having a large decline on Thursday. Shortly after launching the equity Trendpilots, RBS launched the Gold Trendpilot ETN ( TBAR). Since its inception it has tracked the SPDR Gold Trust ( GLD), as it should (small lag due to the higher expense ratio) with volume that is higher than I would have expected at 18,000 shares a day.

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