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) gave up -1.5%, the S&P 500 SPDR Trust ( SPY) 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? Follow TheStreet on Twitter and become a fan on Facebook. 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) 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).
In contrast, all-world ETFs from Vanguard All World excluding U.S. ( VEU) to iShares MSCI All World excluding U.S. ( ACWX) 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. 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), Vanguard REIT ETF ( VNQ) and Vanguard Dividend Appreciation ( VIG). 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)), JP Morgan Alerian MLP ( AMJ), Claymore Multi-Asset Income ( CVY) 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.