Moving Averages: Month-End Preview
Doug Short | Jul 31, 2012 09:11AM ET
Here is a preview of the monthly moving averages I track early on the last business day of the month. All three S&P 500 strategies is now signaling "invested", and two of the five Ivy Portfolio ETF monthly moving averages are currently signaling "cash".
Positions that are less than 2% from a signal are highlighted in yellow. Note that two of the Ivy Portfolio ETFs, Vanguard FTSE All-World ex-US (VEU) and PowerShares DB Commodity Index Tracking (DBC), are less than a percent from a signal change.
Note: My inclusion of the S&P 500 index updates is intended to illustrate a popular moving moving-average timing strategy. The index signals also give a general sense of how US equities are behaving. However, for followers of a moving average strategy, the general practice is to make buy/sell decisions on the signals for each specific investment, not based on a broad index. Even if you're investing in a fund that tracks the S&P 500 (e.g., Vanguard's VFINX or the SPY ETF) the moving average signals for the funds will occasionally differ from the underlying index because of dividend reinvestment, which is not factored into the index closes.
The bottom line, as we've pointed out earlier, is that these moving-average signals have a good track record for long-term gains while avoiding major losses. They're not fool-proof, but they essentially dodged the 2007-2009 bear and captured significant gains since the initial buy signals after the March 2009 low.
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