Skip to main content

Do multiple ETFs over their 200-DMA signify something more than a bear market rally?

Question of the day: Is it really just a bear market rally when we are starting to see so many ETFs moving above their 200-day moving average?

Many analysts consider a stock moving above its 200-DMA to be a buy signal. Furthermore, it is also said that a bull market can be defined as one where major market averages are trending up above their 200-DMA.

Through most of this bear market, we haven't seen many stocks or ETFs anywhere close to their 200-DMA. Now, that seems to be changing.

In my highly unscientific sample, I'm seeing a number of sector ETFs as well as the NASDAQ 100 have moved above their 200-DMA recently. Included among the ETFs I am tracking are the following:
  • Technology iShares (IYW)
  • Network iShares (IGN)
  • Semiconductor iShares (IGW)
  • Consumer Discretionary iShares (IYC)
Comparable ETFs from the SPDR family of funds are essentially doing equally well.

In addition, the NASDAQ Composite is a hair away from crossing over its 200-DMA and the Telecom iShares (IYZ), though it didn't quite hold on after crossing above its 200-DMA today, seems ready to make the move soon. Materials (IYM) and Industrials ETFs (IYJ) are also only a few points away their 200-DMA.

Looking farther afield, the iShares FTSE/Xinhua China ETF (FXI) crossed above and now seems to be consolidating at a level above its 200-DMA.

Other major market averages such as the Russell 2000 are only a few points away from their 200-DMA. Will they be rejected or will they power through and confirm something stronger than a bear market rally is underway?

I'm not much at making those kinds of predictions but I am becoming more encouraged with the fact that we now have some leadership that might be able to pull this market upward.

Disclosure: small position in IGN
Labels:

Comments

Post a Comment

Popular posts from this blog

Time to be conservative with your 401K

Most of the posts I and other financial bloggers write are typically focused on individual stocks or ETFs and managing active portfolios. For those folks who are more conservative investors, those whose main investment vehicle is a 401K, for example, the techniques for portfolio management might be a little different. The news of stock markets falling and pundits predicting recession is disconcerting to professional investors as well as to those of us who are watching our balances in an IRA or 401K sag. What approach should the average 401K investor take? Let's assume that the investor is contributing on a regular basis to one of these retirement accounts. There are two questions that the investor needs to ask: 1. Should I stop putting the regular contribution into stocks? My feeling is that investors making regular contributions are being handed a present by the markets. Every week the market goes down, these investors are lowering their average cost. When markets reco...
7 comments
Read more

The Trouble with Trend Reversal Indicators

Many of us use various trend reversal indicators to time our trades. Our desire is to determine when prices have changed direction so that we can ride the new trend. Why doesn't it always work out? The first reason, of course, is that unforeseen events often drive prices in unexpected directions. That is something we can't change and it often makes all of us technical traders crazy. On the other hand, sometimes an unforeseen event is a prelude to a new trend. A stock spikes up on a what seems to be a one-time piece of good fortune and soon falls back. Does it start making its way back up or does it resume a previous down trend? The conflict within trend reversal indicators is that, though they can definitely tell when prices change direction, they suffer from two problems. One, they often can't determine how significant that move in prices actually will be. Two, they are often lagging indicators. As such, they can be late in providing a signal, sometimes leading the investo...
1 comment
Read more

Brazil - in a bubble or on a roll?

A couple of years ago, no one recognized the real estate bubble even though it was under everyone's nose. Now, analysts and bloggers are seeing bubbles everywhere they look. One of them, they say is in Brazil whose Bovespa stock market index has doubled in the last 12 months. Does the bubble accusation hold water? I don't think so and here are 7 reasons why Brazil is by no means a bubble economy: Exports have held up over the past year thanks to demand from China for Brazil's soya exports and iron ore. This was helped by the the Brazilian government's drive to improve trade links with Asia and Africa. Export diversification, spurred by a more active trade policy and increased focus on "south-south" trade under current president Lula, helped mitigate the decline in demand from OECD (Organization for Economic Co-operation and Development) countries A "sensible" economic framework has been in place since the 1990's. This has included inflation ...
4 comments
Read more