This week brought further downside and volatility to the market, with only 8 of 26 categories positive and an average week category return of -1%. 

    Of those 8 categories that ended the week up, only utilities, Europe, commodities, and short funds were up over 1%. 

    Of the 18 categories that ended the week down, 15 were down over -1%, 8 were down over -2%, and 3 were down over -3%.  The worst performers were infrastructure, transports, energy, and China.

    At this point, only the currency, commodity, and short categories are currently up over the past trading month. 

    Year-to-date, large- and mid-cap categories have only marginally positive adjusted close returns, with small-caps already sliding beneath par. 

Dollar-Weighted Category Return

Dollar-Weighted Category Return

    Wednesday saw continued outflows with 24 of 26 categories trading down, bringing 14 of 26 categories to red for the past week.  The worst percentage losers for the day were Latin America, emerging markets, and Europe, all trading down over 2%.  Dollar-weighted European ETF returns are now nearly break-even for the past month.  Note as well the incredible 97% correlation between the Latin American ETF returns and the S&P 500 over the last week.  I would avoid Latin American ETFs as alternatives to US markets right now if you're looking for diversification.

    Those categories that were significantly less negative than the rest of the market are convertibles, call/write, commodities and resources, and Japan, as had been seen in Tuesday's market summary.  Given the possibility of a market down-turn, I would most favor the writer funds, as selling calls is pure profit in falling markets.

    The only two categories up were currency ETFs, just by a hair, and short ETFs.  This week's US data, combined with the ECB tick and strong Australian data, has accelerated the dollar depreciation trend.  As the dollar loses strength, watch for increased downside risk in transports, utilities, and Asian funds.

    As the Fed released their latest statement in the last hour, markets have responded cautiously, quickly dropping below the morning open but slowly climbing back to previous intraday levels. Though the continued mention of inflation concerns is not surprising, this likely rules out any rate drop in the near future.  Without this rate drop, the stock market will likely need to find fresh momentum elsewhere.

    Coming on the heels of my look at the overall ETF market in the last three months, and using the same data set, this entry is meant to provide an overview of the country-specific MSCI ETFs.

    So the average MSCI ETF gained about 0.14% daily, with the Netherlands in first and Taiwan in last.  The trend is relatively clear - most economies have seen solid growth, while Taiwan, Hong Kong, and Japan have struggled to tread water.  It's interesting to note that the same issues do not seem to have affected Singapore, Malaysia, or Korea.

    As Carl Delfeld at ETF XRAY and Tom Lydon at ETF Trends have recently discussed, the pound has appreciated considerably in recent months as a result of persisting inflation in the British economy.  Although the results of such currency appreciation can be mixed depending on trade deficit in an economy, the general consensus has been that this should provide an overall boost to the ETF's holdings despite a trade deficit of approximately 4.3 billion pounds.  In order to better determine the historical relation between the Pound and the iShares MCSI UK Index, I have analyzed the return correlation of a number of relevant variables.