Here are five reasons I don't believe this rally has legs ... and why I find XLF's 10% run today rather incredible.

Well, Matt—if your research holds any water, today must have been a BOOM day for the (RAFI) fundamentalists out there. And this huge rally for XLF? I don't believe it for a second. In fact, the same dangerous impulses that led me to buy XLF at $15.07 (and see it promptly drop to below $6) are urging me to sell now that we're almost touching $12. After all, in that October binge of ETF buying (heavy on XLF and FXI—that would be the SPDRs Financials and the FTSE/Xinhua iShares for the less-ETF-focused among you), I'm actually AHEAD right now ... after a disastrous start.

In this environment, I'm looking forward to talking to Rob Arnott this Thursday at 1:00 p.m., where he'll be doing a webinar

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Unless you're entertaining yourself, avert your eyes or enjoy your ulcer.

GS trading at its IPO price, I'm underwater on my recent XLF and FXI buys and god knows all the rest of my past 5+ years of invested assets. The kids will never make it to college, we'll have to downsize into a tent during retirement, etc. etc.  Hougan, like the rest of us, just can't take his eyes off of this colossal train wreck we're looking at.

But he should and we should.  Realistically, the situation does look very, very ugly.  We likely have NOT hit the bottom yet, and we're in for a long ride of flat markets, and worse, a recession-burdened economy.  But a great depression? I doubt it.  And if it is, it's not a war, and if it is, at least you've got all 4 limbs, and if you don't at

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Exchange-traded funds (ETFs) are excellent trading vehicles that allow investors to easily play whole sectors, indexes, or individual commodities. ETFs may be structured like mutual funds, but are bought and sold like stocks.

Inverse ETFs enable one to place a bearish bet, effectively going “short” without having to borrow shares, as you would with stocks. Another advantage of inverse ETFs is that the downside risk of going long on the “short” is finite, meaning you can only lose your initial investment. The potential loss from shorting a stock is theoretically unlimited.

Leveraged ETFs are designed to replicate twice the expected gain or loss of the underlying commodity, index, or basket of equities. Large moves in the markets like those of the past few days create opportunities for leveraged ETFs to realize massive gains. FXP, for example, returns approximately twice the inverse (i.e., double short) of the China FXI index, and gained 26.3%

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This could be the greatest show on earth and you should really give traders a hand. Markets opened strongly on the back of oversold conditions, a stronger dollar, weaker gold, oil and commodities. But later with FNM, FRE crushed and others in the financial sector, stocks fell off a cliff.

It looked mighty grim for awhile this afternoon, but Da Boyz and their allies were there to save, if only temporarily, what was turning out to be horrible day. At the stroke of 3 PM 12K contracts, mostly on the buy side, hit the NASDAQ eMini contract and the short squeeze began. While prices faded into the close the action was spectacular all day.

Volume was again heavy and breadth horrible. Yahoo/Finance has trouble with numbers and maybe that’s a reason they can’t figure out MSFT’s bid….

Big Wednesday, Sandy Beach, Oahu.

With markets short-term oversold bulls were looking for any catalyst to spark a rally. Although the Fed said nothing, nothing was all it took to get things going. But, as we got on after the announcement, what rally we had save tech, fizzled.

Volume was healthy and breadth remained positive.

Naturally, positive breadth data revived the McClellan Oscillator.

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The world market capitalization is ever changing as share and market values fluctuate, and the US share is shrinking.

The US market share has been declining steadily in recent years, while other markets have been increasing. Today, the US market (proxy SPY) has declined to less than 41% from nearly 53% as recently as of 2004, according to the S&P “World by the Numbers” report. In earlier times, the US share was much higher than 53%.

Emerging markets (proxies VWO and EEM) have been gaining market share notably through the BRIC countries of Brazil (proxy EWZ), Russia (proxy RSX), India (proxy INP), and China (proxy FXI).

Germany (proxy EWG) and Japan (proxy EWJ) have held their own and actually increased their market share since 2004.

This table presents the annual market shares for the US, Japan, Germany, China, India, Brazil and Russia as of …

Simple arithmetic charts are OK for short-term performance review, but can be misleading for long-term purposes. Semi-log charts are best for long-term perspective.

Arithmetic charts space each Dollar move equally on the vertical Y-axis. Semi-log charts space each percentage move equally on the vertical Y-axis. Either method creates only minor differences for short-term charts, but dramatic differences over the long-term, particularly if the security is strongly trending.

The following charts of MSCI emerging market indices illustrate the point. They show 15+ years of gross performance (price plus all dividends) for the emerging market index (proxies: EEM, VWO), India (proxy: INP), China (proxy: FXI), Brazil (proxy: EWZ), Russia (proxy: RSX) and Mexico (proxy EWW).

The semi-log format (called “semi” because the X-axis remains arithmetic with equal spaces between dates) gives a truer picture of trend.  A constant rate of change on

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Recently I posted how international ETF stand in relation P/E to GDP (link to post). The most undervalued seemed to be emerging markets of BRIC (Brazil, Russia, India, China).World markets had turned to negative on October and have started bear market which lasts already 6 months. But major fall happened at the beginning of year 2008. I run my screen for ETF to see the leaders and laggards on YTD basis. Her you have result. ...

There are 67 countries between the United States, Canada, EAFE, emerging market and frontier market countries. It may be helpful to you if you visualize the geographic relationship between those countries when you think about making country, region or development stage country investments.

The pie chart shows the relative market cap size of the US, Canada, the 21 EAFE (Europe, Australasia, Far East) countries, and the 25 emerging market countries. The stock market capitalization of the 19 frontier market countries is essentially negligible in comparison to the other market categories.

The map color codes the location of Canada, EAFE countries, and the emerging and frontier market countries. The US in not color coded.

It is interesting to note that the square area of the emerging markets is quite …