Thanks for stopping by the only investing website on the 'net designed by working folks for working folks. If you'd like to learn to become a smarter investor with your 401(k) or IRA - and you should - come on in and get started.
We'll show you how to get a better understanding of the markets and how to get more out of your long term investments. And we lay it all out for you in plain English (well, a Southern variety of English, anyway). Hey, you work hard for your money - learn how to make your money work hard for you!
PEEKING BEHIND THE CURTAIN
As chart watchers, we are constantly looking at our “Road Maps” for signs that will help us determine market direction. Though it’s not the crystal ball that some gurus would have us believe, a basic price chart - properly understood - can usually reveal the message that the market is trying to send. Generally speaking, a weekly or monthly chart of the S&P 500 can tell us:
> Is the chart showing an uptrend? The market will likely keep moving higher.
> Is the chart showing a downtrend? The market will likely keep going lower.
> Is the chart showing a flat or “sideways” trend? The market is either ready for a change in direction or taking a “breather” after a strong move up or down.
We also use volume, moving averages and patterns to get a better understanding of market conditions, but for the most part, we rely on that big fat S&P 500 price chart. Sometimes, though, we like to “peek behind the curtain” of the broad market index. In other words, we like to see what’s going on behind the scenes. We do that by looking at charts of sector ETFs.
Exchange Traded Funds, or ETFs, can be sector specific, industry specific or group specific (for a more detailed look at ETFs click here). Since these funds are made up of stock in companies within a specific business group, we can use their charts to get a good feel for how that particular part of the economy is doing. We get to peek behind the curtain!
> For example, we keep hearing a lot about the current shape of the housing industry. Let’s take a look at a chart of XHB, the big homebuilders’ ETF from State Street Global Advisors.
We can see that this industry has had a nice run up from late 2011. Since hitting new highs in late spring of this year, the ETF has been moving sideways, but pretty much holding its gains. The chart is telling us that this industry - this segment of the S&P 500 - looks to be in pretty good shape.
With all the ETFs out there now, we can drill down to almost any part of the economy we desire:
> Christmas shopping season is in full swing - how are the retailers doing? Take a peek at XRT.
> Want to put the energy sector under the microscope
Check out XLE.
> "Hone in" on banks (XLF), technology (XLK), utilities (XLU)
The list is almost endless!
Peeking behind the curtain is easy. Just pull up your S&P 500 chart template and type in the ticker of any ETF into the “Get Technical Analysis Chart(s) for:” box in the upper right hand corner of the screen. (if you haven’t made your own S&P template yet, go here for instructions). To get a list of sector ETFs and their tickers, go to Yahoo! Finance, click the INVESTING tab at the top, then open the ETF tab.
Refill your coffee mug and play around with these charts. They can offer some good insight on how the economy - and the stock market - is measuring up. It’s good chart reading practice, too!
NEWS YOU CAN USE
"A New Case for Index Investing"
from US News & World Report
"Investors are More Global Than They May Realize"
from USA Today
"Retired Union Workers Facing Pension Cuts"
from CNN Money
"5 Differences Between Index Funds and ETFs"
from ETF Trends
"Modest 401k & IRA Changes Coming in 2014"
from US News & World Report
VIEWS YOU CAN USE
"A Vanguard Fund Strategy to Double Your Nest Egg"
"Fear is Killing Your Investments"
"Understand Your Indexing Strategy"
"The Erosive Effects of Expenses on a Portfolio's Value"
from The New York Times
"Forget Stock Picking - Stick with the Indexes"
from Mark Hulbert of MarketWatch