The Average Investor's Blog

A software developer view on the markets

The Weekly Update

Posted by The Average Investor on May 29, 2011

The US markets continued their slow but persistent descent. Nothing spectacular, just four consecutive weeks of relatively small (in total about 2.3% on the S&P500 and about 2.8% on the Nasdaq 100) loses. At the same time, the US REIT increased for a second week in a row. More importantly, the Emerging Markets gave a buy signal last Friday after advancing for a second week in a row.

Asset Symbol Position Date In Gain
US REIT VNQ Long 2010-07-23 23.55%
S&P 500 ^GSPC Long 2010-09-30 16.64%
Nasdaq 100 ^NDX Long 2011-03-25 0.85%
Emerging Markets EEM Long 2011-05-27 0%

The month ends on Tuesday, while Monday is a holiday in the US. One of the indexes, the S&P 500, is monitored using the 10 month EMA, thus, a natural question is whether the four weeks of declines will trigger a change in the position. The answer is an affirmative No, barring calamitous events on Tuesday of course. For a sell to get triggered, the S&P 500 needs to drop down below $1247, which is 6.3% lower than the current price of $1331.1. And that needs to happen in a single day.

The only position “in danger” in near term is in fact the Nasdaq 100. The Friday’s close was less than 1% above the EMA (weekly, 20 for this instrument), thus, a drop this week may trigger an exit on Friday. For this to materialize next Friday’s close need to be $2313.89 or lower (the last Friday’s close was $2336.90).

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