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Monday, February 6, 2023


Moving Averages: Month-End Preview

Courtesy of Doug Short.

Here is a preview of the monthly moving averages I track before the market opens on the last business day of the month. All three S&P 500 and three of the five Ivy Portfolio ETF monthly moving averages are signaling “invested”. The S&P 500 10- and 12-month simple moving averages are a change from last month’s cash position. The one Ivy change from last month is that VTI, the US total market index, has flipped to “invested” after five months of “cash” signal.

None of the signals are close to a trigger value (signals are highlighted in yellow if within 2% of a change), so, unless we see some major movement in today’s market, there will be no changes in the month-end close signals.

The one clear observation in this month’s overview of moving averages is the relative strength of US equities relative to the rest of the world (VTI versus VEU).

Month-End Preview 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 Ivy Portfolio

The second of the three adjacent tables previews the 10-month SMA timing signals for the five asset classes highlighted in The Ivy Portfolio.

I’ve also included (third table) the 12-month SMA timing signals for the Ivy ETFs in response to the many requests I’ve received to include this slightly longer timeframe.

After the end-of-month market close, I’ll update the monthly moving average feature with charts to illustrate.

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.

Note: See the Timing Updates for interim updates throughout the month.







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