The Dow Jones Industrial Average finally climbed above 10,000 today for the first time in a year. This milestone is the strongest sign yet that investors believe we’re headed for a recovery. Despite a certain amount of “healthy skepticism,” now is the time for exchange traded fund (ETF) investors to think about getting in.
Strong earnings so far this season had a hand in pushing the Dow above the 10,000 mark. The index is the best-known market indicator and the milestone was greeted with cheers on the trading floor, report Sara Lepro and Tim Paradis for the Associated Press. The Dow and its 200-day moving average below:
“Healthy skepticism” is a phrase used frequently by market pros these days to describe sentiment among investors who are optimistic about Wall Street’s performance over the past seven months, but who are aware that the tides can turn just as quickly, reports the Associated Press. (Read about how emotions can hurt your portfolio).
Investors are educated about how the recovery will take some time and about how much pull the unemployment numbers can have upon a full recovery. Investors are simply comfortable with the notion of a turnaround, but looking to the future with caution is also justifiable.
If you’ve been sitting out this rally, now is the time to consider taking some positions. Some areas of the market have gained as much as 150% off the March 9 lows, and to sit out longer is to risk missing out on even more.
View our ETF Analyzer to see which funds are currently above their 200-day moving average.
We use the 200-day moving average to pick our spots. If this rally reverses itself, have your exit strategy in place and be prepared to execute if and when the time comes. For more detail about strategy and trend following, check out The ETF Trend Following Playbook to get better insight.
For more stories about trend following, visit our trend following category.