What's the Trend? Where's the Price?

It is important to have situational awareness in battle; and investing is certainly a battle these days. From situational awareness, you can attempt adaptive response, which in battle and in this market may be a key to survival.

Let’s look at three key equity funds and three key bond funds representing three key segments of the investment world — the US, non-US developed markets and emerging markets.

This table (as of mid-day June 3, 2009) shows whether the primary trend of the price (as represented by the 200-day exponential moving average) is UP or DOWN over 50-days and over 5-days. It also shows the distance of four moving average prices (100-days, 50-days, 25-days and 1-day [the price]) from the primary trend. Positions more than 1% above the primary trend are shaded green. Those between 1% below and 1% above the primary trend are shaded yellow. Those more than 1% below the primary trend are shaded red.

click image to enlarge

Different investors will interpret opportunity and risk differently from these data, but however you interpret them, it’s good to know them.

Disclosure: We may own some or all of the named securities in some managed accounts.

Comments

[Follower004:]

Is VWO 10.02% above the 200 SMA? ... I see the 200 SMA (based on adjusted closing prices) at 26.08. With VWO trading at 32.74 wouldn't that be more like 25.5% above the 200 SMA?

(32.74 - 26.08) / 26.08 = 25.5%

Please help me with the calculations! Thanks

Jun 04 01:32 PM

[Richard Shaw:]

Your calculations are correct. We used Exponential Moving Averages and erroneously used the label Simple Moving Average. The error is corrected on our blog ( www.qvmgroup.com/inves... ) and we have requested a correction on this SA republication of our article. Sorry and thank you.

Jun 04 03:34 PM

[No Free Cake:]

The blog link you specify still says that VWO is 10.2% above SMA rather than 25.5%.


On Jun 04 03:34 PM Richard Shaw wrote:

> Your calculations are correct. We used Exponential Moving Averages
> and erroneously used the label Simple Moving Average. The error is
> corrected on our blog ( www.qvmgroup.com/inves...
> ) and we have requested a correction on this SA republication of
> our article. Sorry and thank you.

Jun 04 08:58 PM

[Richard Shaw:]

No Free Cake: The calculations were correct for SMA but not correct for EMA. The blog uses EMA and the 10.2% is correct for EMA.

Jun 04 09:21 PM

[No Free Cake:]

Oh, sorry Richard. I assumed when you said you would correct the blog chart that the numbers would reflect SMA rather than EMA.

In your previous articles you used SMA - such as your recent "15 Point TechCheck" for example. Why the change to EMA?

Jun 05 08:37 AM

[Richard Shaw:]

No Free Cake: Good question. I used both the SMA and the EMA when evaluating trend direction (slope of trend line, position of price relative to trend line, and position of shorter averages relative to trend line). SMA being slower with fewer false positives. EMA being faster with more false positives.

Jun 05 11:30 AM