The Average Investor's Blog

A software developer view on the markets

The Weekly Update

Posted by The Average Investor on Jun 5, 2011

Another week in the red for the stock indexes. Early on Friday it looked as if all the indexes I follow will close below their 20-week EMA. However, things improved somewhat later in the day except for the US stock indexes. Thus, if we follow the 20-week EMA, we should have closed the positions both in S&P 500 and in the Nasdaq 100.

Asset Symbol Position Date In Gain
US REIT VNQ Long 2010-07-23 21.51%
Emerging Markets EEM Long 2011-05-27 0.25%

The Nasdaq 100 position was fairly recent, opened on March 25th. It would have resulted in less than 1% loss. Using QLD, the double bull ETF, it would have resulted in a bit more than 2% loss.

The S&P 500 position was much longer – since Sep 10th, 2010. It would have resulted in a 17% gain using the SPY ETF, and in 37% gain using SSO, the double bull ETF. The reason I am showing the performance of the double ETFs is not to suggest using them, but as an illustration of my belief that leveraged ETFs perform “as expected” with trend-following techniques.

One shouldn’t get too excited about this big gain in the S&P 500 either, a quick look at the chart below shows that we have caught quite long stretch of gains without a severe correction.

S&P 500 with 20-week EMA

S&P 500 with 20-week EMA

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