China, the second largest economy in the world, is showing signs of fatigue. Economic growth is slowing and potential problems in their credit market is making the world nervous.
A political crisis in Portugal has also brought the Eurozone crisis back into focus. The severe austerity measures to keep the country solvent has put additional stress on the economy.
Back in the states, we are facing a rising rate environment, which could accelerate if the Federal Reserve begins to cutback on its monthly bond purchasing plan.
With the potential risks floating around, it is important for an investor to have a strategy in place, so that he or she would invest based on sound logical decisions instead of a gut feeling. For instance, we track a long-term trend following strategy centered around the 200-day exponential moving average. If an ETF breaks above the trend, it is a buy signal. On the other hand, if the trends start to weaken, it is a sign to get out. [An ETF Trend-Following Plan for All Seasons]
For more information on the trend following strategy, visit our trend following category.
Max Chen contributed to this article.