23 June 2008

Zero Dow Components Trading above their 50-Day Moving Average

The bear growled mightily on Friday. As you can see from the chart above, zero Dow components are now trading above their 50-day moving averages. If you check out the chart below, you'll see that this has not happened since before mid-2005. I have recently asserted that it's a good time to go long with a Dow-tracking ETF when four or fewer Dow components are trading above their 50DMA.

So, what did I do on Friday? I unloaded my DXD position for a gain of 6.1%. I established that position at the early stage of the bear market rally of a month-or-so ago, which explains the decent, but unspectacular, return.

I lightened my FXP position, with a sale of a small lot of shares for a loss of 8.3%.

I established a long Dow position with a purchase of DDM at $66.93, and in UYG at $23.79. These positions are meant to be held for a few weeks at most--just long enough to see the market work off some of its overdone, oversold move.

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