We have noticed a number of opportunities out there for investors. You can keep track of funds and where they are relative to their trend lines on a daily basis using our powerful ETF Analyzer. This is the only place you will be able to find easily sortable 50-day and 200-day moving average information, and it’s the best way to determine where the trends are.
Here’s how to use it to your advantage:
You’ll notice just above the first ETF listed are categories: symbol, name, previous close, and so on. Toward the right-hand side of the screen, notice EMA 50 and EMA 200. These two columns tell you how far above or below its 50-day and 200-day moving average a fund is. You can sort all of the ETFs in our analyzer by any category you choose – just click on the category name.
Back in October, we noted the importance of being ready for a rebound in the markets. What this means is that we need to be armed and ready to go with a set strategy, because when the markets start moving up investors won’t want to miss any of the potential returns it could generate.
Trillions of dollars are on the sidelines right now, and investors are itching to put them to use. Our typical strategy in “normal” markets was to use the 200-day moving average to determine when we were in and when we should be out. However, in 2008, the markets were anything but normal. The unpredictability of it all led us to a short-term strategy we could use until things steadied a bit.
Most funds are still off their 200-day moving averages, some by double digits. If we wait for them to cross the line, we could be missing out on a good portion of gains. As a result, we have a short-term plan for getting back into the markets if the rebound is real:
- When a fund crosses above its 50-day moving average, put 25% of the value of your portfolio.
- When the fund goes up 5%, put another 25% in.
By the time this happens, the 200-day moving average should be well within sight, and things should begin operating in line with our normal buy parameters once again.
Just because the markets have had more good days than bad recently, though, it doesn’t mean that we’ve reached the bottom. We could still be in for some hard times ahead. What we’re trying to do instead is to watch for those areas that are moving – different areas of the markets move independently of one another. They’re not always on the same track. Emerging markets can be going up while commodities are tanking; technology can be soaring while nuclear energy falters.
For full disclosure, please note that these are not buy and sell recommendations. The ETF Analyzer is a purely analytical tool.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.