Monday, May 04, 2009

Many Sectors Moving Above Its 200-Day M.A.

Here is more comforting information that the US bull run may not be over so soon. Many analysts consider a stock moving above its 200-DMA to be a buy signal. Furthermore, it is also said that a bull market can be defined as one where major market averages are trending up above their 200-DMA. Through most of this bear market, we haven't seen many stocks or ETFs anywhere close to their 200-DMA. Now, that seems to be changing.

Thanks to the advent of ETFs in the US, it is easier to track movements in sectors. The sector ETFs are composed of many stocks, and that lends more credibility to the moving averages. There are a number of sector ETFs as well as the NASDAQ 100 have moved above their 200-DMA recently.
  • Technology iShares
  • Network iShares
  • Semiconductor iShares
  • Consumer Discretionary iShares

In addition, the NASDAQ Composite is a hair away from crossing over its 200-DMA and the Telecom iShares. Materials and Industrials ETFs are also only a few points away their 200-DMA. Looking farther afield, the iShares FTSE/Xinhua China ETF crossed above and now seems to be consolidating at a level above its 200-DMA. Other major market averages such as the Russell 2000 are only a few points away from their 200-DMA. Will they be rejected or will they power through and confirm something stronger than a bear market rally is underway?

1 comment:

David said...

Now that we know what to buy and at what price to buy. The next question is when do we sell?