• 680 days Will The ECB Continue To Hike Rates?
  • 681 days Forbes: Aramco Remains Largest Company In The Middle East
  • 682 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 1,082 days Could Crypto Overtake Traditional Investment?
  • 1,087 days Americans Still Quitting Jobs At Record Pace
  • 1,089 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 1,092 days Is The Dollar Too Strong?
  • 1,092 days Big Tech Disappoints Investors on Earnings Calls
  • 1,093 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 1,095 days China Is Quietly Trying To Distance Itself From Russia
  • 1,095 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 1,099 days Crypto Investors Won Big In 2021
  • 1,099 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 1,100 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 1,102 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 1,103 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 1,106 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 1,107 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 1,107 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 1,109 days Are NFTs About To Take Over Gaming?
How Millennials Are Reshaping Real Estate

How Millennials Are Reshaping Real Estate

The real estate market is…

Is The Bull Market On Its Last Legs?

Is The Bull Market On Its Last Legs?

This aging bull market may…

  1. Home
  2. Markets
  3. Other

Hedge Funds Care, So Should You

Markets set asset prices. Markets determine how much your brokerage account, IRA, and 401(k) are worth. Hedge funds and large institutions drive markets. Therefore, it is prudent to know what large institutions and hedge funds care about and what they see in the current market. Right, wrong, or indifferent, hedge funds and large institutions monitor closely and care about 200-day moving averages.

In oversimplified terms, the big market players like to be in markets that are above their 200-day and out of markets that are below their 200-day. Despite all the calls for the market to head south, both the NASDAQ and Dow closed above their 200-day moving averages on Friday.

NASDAQ

Markets can reverse and be volatile near the 200-day; so one day does not mean all that much. However, the longer these markets can hold their 200-days, and the further they can move away from them in the short-term, the more meaningful it becomes relative to the potential future value of your investments. Shorts will also be much more inclined to cover positions in markets that have recaptured their 200-day moving average, which can fuel a short-covering rally.

Dow Jones Industrial Average

One of the best ways to monitor the health of any rally is to look at the number of stocks participating, which is referred to as market breadth. Wide participation is a sign of a healthier rally; one which has higher odds of continuing for more than a few days. How does market breadth look as of Friday's close? pretty good. The Summation Index (shown below) is an intermediate-to-longer-term measure of market breadth. The Summation Index has made a higher low and recently closed above its 35-day moving average for the first time in eighty-eight calendar days. Both occurrences lean bullish for the intermediate-term.

NYSE Summation Index

CCM uses a proprietary market model, known as the Bull Market Sustainability Index (BMSI), to help us better understand the market's current risk-reward profile. The current profile looks attractive, especially over the next six months. This ties in well with our comments made on July 2, 2010, Stocks May Surprise By Year-End.

S&P500 Performance

The health of the markets have improved quite a bit in recent weeks, but things still need to be monitored closely, especially as markets congregate near their 200-day moving averages. We would still classify the markets as neutral-to-bullish. Some other short-term bullish developments are outlined in Stock Market Outlook Improving Short-Term.

 

Back to homepage

Leave a comment

Leave a comment