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There are numerous ETFs that now track everything from 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.  Consequently, I now apply a version of my System Quality Number® (SQN®) score to measure the relative performance of numerous markets in a world model.

The Market SQN score uses the daily percent change over a 100-day period for input. Typically, a Market SQN score over 1.47 is strongly bullish and a score below -0.7 is very weak. The following color codes help communicate the strengths and weaknesses of the ETFs in this report:

• Dark Green:  ETFs with very strong SQN® 100 scores > 1.47
  
• Light Green: ETFs with strong SQN 100 scores (0.70 to 1.47).
  
• Yellow: ETFs with slightly positive Market SQN scores (0 to 0.70).  These are Neutral/Sideways
  
• Brown:  ETFs with slightly negative Market SQN scores (0 to -0.7).
  
• Red: Very weak ETFs that earn negative Market SQN scores (< -0.7).
  

This is basically the same ratings that we use for the SQN® Score.  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
Each month, we look at the equities markets by segment, region and sector. Europe and the US are starting to look bad while Asia and some of the Americas are doing fine.  
I put off doing the SQN report for one week because I was concerned when the market turned to Neutral Quiet despite the S&P 500 hitting new all- time highs.  Well, nothing much has changed in the last week as the range change percent over the last 100 days for the S&P 500 is still under 4.   And that’s shown above by the S&P 500 appearing as yellow.  All US market segments are either yellow or brown except for microcaps which are in a strong bear market (red).   The other American economies are doing much better than the US with Canada, Mexico, Brazil, and Latin America all being green.  Emerging Markets are also green.
Colors in Europe are like those in the US — no greens and ranging from yellow (Russia, UK, Emerging Europe and Spain) to Red (Netherlands and Sweden).  On the right side of the table, only South Africa is light green.
Asia is in much better shape with the worst countries being yellow (Australia, China, Malaysia).  There are plenty of light green countries and even dark green ones (S&P China, Hong Kong, and Singapore).  
In specific sectors there are a few light green areas.  These include Energy, Oil and Gas Exploration, REITs and Technology, plus the Dow Transports.  However, we also have four areas that are red: Homebuilders, Regional Banks, Gaming, and Volatility.
SQN scores for currencies show the Swedish Krona, the Swiss Franc, and the Euro all to be extremely weak.  In contrast, the US Dollar and the Brazilian Real are both strong.  The Yuan’s Market SQN® score didn’t show up this month due to an error in the CYB ETF data.  If the data error was fully resolved, a subsequent check showed the Yuan has now turned yellow compared to last month’s very weak red.
Commodities, Real Estate, Debt, Top and Bottom Lists
The next chart shows real estate, debt instruments, commodities and the top and bottom ETFs for the past 100 days.
Commodities are much weaker this month as only base metals, coal and steel show up light green and there are no dark green areas.  Oil is the only yellow sector; all the rest are negative with timber, agriculture and livestock all being red.
US real estate has moved from super strong to light green, while Chinese real estate has improved from light green to dark green. All the interest rate sectors are positive.  Long term interest rates and inflation protected real estate are green while the shorter term instruments and junk bonds are now yellow. 
May showed 3 ETF scores above a Market SQN of 4.0 and 9 ETF scores above 3.0. In June, the entire list was above a 3 with only one scoring above 4. This month, the strongest ETF, PWZ, only scores a 2.66—which means it's score actually went down over the month.
Last month, only three of the weakest ETFs scored below -1.0. This month all fifteen are below -1.0 and three are below 2.0.  These tend to be agriculture funds. While it has been nearly six weeks since I did the last SQN® report, this represents a huge change.

Summary
Now let’s look at our newest table which measures the percentage of ETFs in each of the strength categories.  At the end of June, 87% of the ETFs we track were either bullish or very bullish, while only 3.3% were bearish or very bearish.  On August 8th, despite a new closing high in the S&P 500 two weeks ago, we have a much different picture.  33.1% of the ETFs are either bullish or very bullish.   This is down by about 54%.  And now 31.2% are bearish or very bearish.   This is up by 27.9% — a huge change.   

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%
Sept.  30th	1%	13.8%	42.3%	23.0%	19.1%
Nov. 1st	13.3%	48.3%	21.8%	12.5%	3.3%
Dec 1st	14.6%	42.7%	24.2%	13.3%	4.3%
Dec 31st	19.3.%	45.5%	22.0%	11.3%	2.9%
January 31st	8.0%	49.3%	20.7%	12.7%	7.6%
February 28th	18.9%	48.4%	18.1%	6.2%	6.8%
March 31st	4.9%	40.2%	38.8%	13.3%	3.1%
April 30th	11.1%	33.9%	40.2%	11.3%	1.8%
May 31st	12.5%	46.5%	27.7%	7.6%	6.0%
June 30th	53.4%	33.7%	14.2%	2.5%	0.8%
August 8th	9.9%	23.2%	39.8%	23.8%	7.4%

What's Going On?
Economic fundamentals are still terrible.  The US stock market moved from Strong Bull to Neutral Quiet in a very short period.  This could either be the start of something strongly to the downside or just a short pause.  Nevertheless, sideways quiet markets are very difficult markets in which to make money.  Act based upon what is happening, not based upon what you think will happen.  And be careful.
Until next month, 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 because trying to navigate the 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 own beliefs about the markets.
 

About the Author: Trading coach and author Van K. Tharp, Ph.D. is widely recognized for his best-selling books and outstanding Peak Performance Home Study Program—a highly regarded classic that is suitable for all levels of traders and investors. You can learn more about Van Tharp at [You must be registered and logged in to see this link.] His newest book, Trading Beyond The Matrix, is available now at matrix.vantharp.com.