The Average Investor's Blog

A software developer view on the markets

The Weekly Update

Posted by The Average Investor on Feb 21, 2011

Looking at the market as of late, I can’t help but wonder what is it trying to tell us. Most likely (tongue in chick) it’s seeing some prosperous times at the horizon. Following the market, the gains in the long-term trend-following positions have increased yet again.

Asset Symbol Position Date In Gain
Nasdaq 100 ^NDX Long 2010-09-03 27.92%
US REIT VNQ Long 2010-07-23 17.60%
S&P 500 ^GSPC Long 2010-09-30 17.68%
Emerging Markets EEM Long 2011-02-18 0%

The Emerging Markets gave another buy signal on Friday. Let’s see whether it will be another short term whipsaw like the previous one.

One more thing, the S&P 500 is 14.71% above its 10-month moving average. According to my R code (which is not necessarily correct;)) this index is in the 98th quantile with respect to it’s 10-month moving average and in 97th quantile with respect to it’s 20-week moving average. In other words, for the past 60 years, the situation foreseen by the market was better than what it’s seeing right now in only two percent of the cases!

Don’t get excited yet, this is not such a rare event – it has happened on 397 days in the past since 1950 (15,383 days of history). 🙂 The last time it happened was on several occasions (on 106 days in total to be precise) between November 1996 and April 1999. Here is the month list:

1951: Jan, Feb
1954: Sep-Dec
1955: Jan-Feb, Jun-Dec
1958: Dec
1961: Apr
1971: Apr
1975: Jun
1976: Jan
1980: Sep-Nov
1982: Oct-Dec
1983: Jan-Jun
1986: Feb-May
1987: Jan-Apr, Jun-Aug
1989: Jul, Aug
1996: Nov
1997: Feb, May-Oct
1998: Feb-Apr, Jul, Dec
1999: Jan, Apr

Some of the months on the list are just before some really scaring events (Aug 1987, Apr 1999, etc). Keep the printing press, oops the economy, rolling and let’s be optimists – this time it’s going to be all different.

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One Response to “The Weekly Update”

  1. […] than a blip. The different indexes continue to be heavily over-bought, just a tad lower than the record levels the market posted last […]

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