Last week’s action was very unique for me. Despite the 4-consecutive up days in the S&P 500 and despite the breadth of positive moves, I generated more new stock DOWN signals (231) vs. only 56 new UPs.

While that is not an abnormally high number and I didn’t feel that individual stocks were weakening dramatically, something else really stood out - ETFs.

This week I gave 235 new DOWN signals in the 286 ETFs that I cover. Of the 8 new UPS in the HEDGEfolios ETFs universe, 6 of them were bond ETFs which typically turn higher as the equity markets roll over.

A normal week in ETFs has me changing from 0-10 signals. It is very rare for me to make wholesale changes.

The last time I made so many ETF signal changes in one week was on February 25th, 2008 when I gave 153 new UP signals and 0 new DOWNs. Three weeks later, they were in great position to take advantage of the rally we got from the Bernanke / BSC bailout.

The previous instance of big ETF changes came on October 15, 2007 when I gave 66 new DOWNs vs. 6 new UPs (all of them were the same bond ETFs). A week later on October 22nd, I followed that with another 46 new DOWNs and no new UPs. Remember that the record close of the S&P 500 (1562.25) occured on October 9, 2007 - the week preceding my big bearish reversal in ETF signals.

Another bullish example came on July 3, 2006 when I gave 75 new UPs and no new DOWNs. Pull up a chart from back then - the market had been extremely negative since May 2006 and continued that way until late July. Following that - stocks advanced about 15% until late February 2007.

This week’s massive turnover in ETF signals has me concerned. Every previous instance of similar changes came right before a significant reversal in market direction. Time will tell if this continues to be a reliable indicator. Note that I have 71% UP signals in the 3415 stocks I cover and I will not hesitate to get out in front of any move if I see individual stocks weakening. I expect that I will see a crossover in the HEDGEfolios Timing Indicator and HEDGEfolios Signal Indicator within the next few weeks.