Week 12 Major Markets Trending and Performance
The markets trending actually improved somewhat over the last week. One would imagine, with all the Fed and bank drama along-with the recession talks, things would look worse than before. But quite the opposite. Of course, whether this is a meaningful improvement remains to be seen.
Trending Heat Map
The S&P 500 is slowly improving, and the price is now crossed above both 10-day and the 20-day moving average.
Both the NASDAQ and the NASDAQ 100 are now trending perfectly bullish.
China FXI is slowly improving, and the price is now crossed above both 10-day and 20-day moving average.
EFA no change.
Emerging Markets EEM price crossed over its 10-day and 20-day moving average.
Dow Jones price crossed over its 10-day moving average.
Performance
I wanted to look at a more expanded version of the performance and so added the monthly returns for this year. March is clearly demonstrating a strong divergence primarily between the NASDAQ and the Russell 2000. The best returns would have been driven through a pairs trade of long NASDAQ and short the Russell 2000.
This is the reason I review several markets and not just the S&P 500. I will admit though that I am very surprised by the breadth of the divergence that I see today. We can see that February was a down month for all markets and January was an up month for all markets. March has been different.
Week-over-Week Performance
Again, what sticks out is the underperformance of the Russell 2000 over the last couple of weeks when compared to the other markets. We have been seeing the gains in the NASDAQ which has been pulling the S&P 500 along with it as well. This week, the global markets also did well. So, is the NASDAQ leading the other markets to the upside? Will the upward trend continue to take the markets to bullish territory?
The strange thing is that I have been making money recently by mostly staying short the markets. My timing has been good (or lucky) and so this short-side trading has worked for me. Certainly, the experts/pundits are talking about markets going down from here for the most part. But, as we know, price is truth and talk are just opinion.
I do not give an edge to the bulls or the bears at this point. I have to respect that the price movement has been generally good for the S&P 500 and the NASDAQ and poor for the Russell 2000. I do not know which side wins. Does the Russell 2000 (which is the broader market) bring the other markets down or the NASDAQ and S&P 500 bring the other markets up? All I can say is I will be watching and playing the market accordingly.
As of now, I am mostly playing the short-side and hedging that with Gold/Silver long positions. But I am going to be nimble and make adjustments as the markets play out. I am here to make money, not to prove I am right.