There are numerous ETFs that I track including countries, commodities, currencies and stock market indices to individual market sectors.  ETFs provide a wonderfully easy way to discover what’s happening in the world markets.  I use the System Quality Number® (SQN®) score for 100 days to measure the relative performance of numerous markets in a world model. 
The SQN 100 score uses the daily percent change for a 100-day period. Typically, an SQN score over 1.45 is strongly bullish and a score below -0.7 is very weak. We use the following color codes to help communicate the strengths and weaknesses of the ETFs:

• Green: ETFs with very strong SQN scores (0.75 to 1.5).
  
• Yellow: ETFs with slightly positive SQN scores (0 to 0.75).
  
• Brown:  ETFs with slightly negative SQN scores (0 to -0.7).
  
• Red: Very weak ETFs that earn negative SQN scores (< -0.7).
  

The world market model spreadsheet report below contains most currently available ETFs; including inverse funds, but excluding leveraged funds.  In short, it covers the geographic world, the major asset classes, the equity market segments, the industrial sectors and the major currencies. 
World Market Summary
In some months, just looking at the first part of the report will tell you the whole story.  Most of the world is neutral or worse.  The US, which was light green last month, is now neutral, as is Europe.   The rest of the world, with the exception of China and the Netherlands, is bearish.
Even in the Americas, everything with the exception of the US is weak.   Brazil, Chile, Mexico and Latin America are all red, while Canada is brown.
Last month, there was some real strength in US sectors, but now, most of that has disappeared.   Pharmaceuticals, Aerospace and Defense, Biotech and Genome are still dark green, but the scores are now below 2.0.  All other dark greens from last month have turned light green.  The light green sectors include biotech, consumer discretionary, brokers, food and beverage, retail, insurance, media, regional banks and software.   
On the negative side, REITs are now red, while consumer staples, homebuilders, metals and mining and utilities are brown.   Volatility is also brown; however, that’s an improvement from last month when it was red. 
Currencies still are all particularly weak, with only the Chinese Yuan being light green.  The US Dollar, the Euro and the Krona are brown.   While the Australian dollar (below -2.0), the Brazilian Real, the Canadian Dollar and the Indian Rupee are all red.   Since we’ll be going to Australia again during their summer in about six months, perhaps the Aussie dollar is a good long-term buy (that’s a joke, not a recommendation). 
The next chart shows real estate, debt instruments, commodities and the top and bottom ETFs for the past 100 days. 
Last month, there were eight areas in which the SQN 100 was above 2.0.  The only remaining one is the Aussie dollar.  Now, there are eight areas in which the SQN 100 is minus 1.75 or worse.   These include global currencies, the Real, inflation protected bonds, Chile and several Municipal Bond ETFs.   Can you remember when inflation protected bonds and municipal bonds were the safe place to put your money?    Every other type of bond, except for short term, is red.
Commodities are also generally weak with only oil and livestock being light green.   Gold, silver, base metals, steel, commodities, global water, timber and agriculture are brown.  Global agribusiness, coal and natural gas are red.   The only two agriculture and global agribusiness are all red.  
And lastly, all of the real estate sectors have gone from brown to red, with the exception of Chinese real estate which is still brown.
Summary
I’ve decided to keep a new table to indicate the percentage of ETFs on our list that are in each category. This will be kept up monthly (at least).   You’ll notice that this month, we begin with only 16% of all ETFs being bullish, whereas 36.8% are bearish.

Date	Very Bullish	Bullish	Neutral	Bearish	Very Bearish
	> 1.5	0.75 - 1.5	0 - 0.75	0 - -0.7	< - 0.7
January 31st	27.1%	39.6%	20.7%	6.4%	4.7%
February 28th	10.3%	45.2%	24.4%	11.9%	7.5%
March 31st	39.2%	25.5%	19.1%	9.0%	6.4%
April 30th	49.1%	21.1%	14.8%	8.0%	6.2%
May 31st	29,2%	23.6%	19.9%	12.3%	14.2%
June 30th	2.1%	31.0%	23.2%	22.0%	20.9%
July 31st	8.2%	33.5%	29.0%	13.3%	15.2%
August 30th	1%	15%	46.4%	19.3%	17.5%

I discovered that my spreadsheet would give me this data for each month this year.   Noting that the ETFs are clearly biased toward what is happening in the US, because so many of them are US-based, you’ll notice how, in January through May, more than 50% of the ETFs were bullish.  That dropped to 33.1% in June, 41.7% in July, and then to its low of 16% in August.   Do you see a trend?
What's Going On?
As of July, you could have been up as much as 20% by being invested in the US equity markets.   In August, you gave up some of those gains.   And who knows if the Fed will continue to buy $85 billion worth of bonds monthly throughout the year. 
Remember that pension money has now stopped flowing into the market for this year.   So overall, except for the Fed, there should be a net outflow because of the number of retirees who now need their investments to live on.
Until next month’s SQN report, this is Van Tharp.
The markets always offer opportunities, but to capture those opportunities, you MUST know what you are doing.  If you want to trade these markets, you need to approach them as a trader, not a long-term investor.  We’d like to help you learn how to trade professionally, trying to navigate these markets without an education is hazardous to your wealth.

All the beliefs given in this update are my own. Though I find them useful, you may not.  You can only trade your beliefs about the markets.