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Getting Technical

07/27/2010

On July 26, the S&P 500 Index closed above its 200 day moving average for the first time since June 21.  Watch also the 100 day moving average - the S&P 500 Index has not closed above the 100 day moving average since May 13 of this year. Currently, the 100 day moving average is at 1128.75. The S&P 500 Index closed on July 26, 2010 at 1115.01.

Speaking of moving averages, the U.S. ten year Treasury yield has not closed above its 50 day moving average since April 26. Currently, the 50 day moving average rests at 3.1299%. The ten year yield, as of the close of business on July 26, 2010, was 2.9941%

How about gold?  Spot gold prices have not closed below their 200 day moving average since early January 2009. The 200 day moving average is currently at 1144.51 - getting close!  Spot gold settled on July 26, 2010 at 1183.10.

I point out these three technical reference points because, for the recent bullish momentum in equities to continue, it would be favorable to have the S&P 500 Index break above the 100 day moving average, ten year Treasury yields to rise above their 50 day moving average, and for spot gold to decline below its 200 day moving average. 

Those 3 events would encourage investors to move out of "safe haven" assets such as gold and treasuries and increase their allocations to equities.

 

 

 

Virtus Investment Partners provides this communication as a matter of general information. The opinions stated herein are those of the author and not necessarily the opinions of Virtus, its affiliates or its subadvisers. Portfolio managers at Virtus make investment decisions in accordance with specific client guidelines and restrictions. As a result, client accounts may differ in strategy and composition from the information presented herein. Any facts and statistics quoted are from sources believed to be reliable, but they may be incomplete or condensed and we do not guarantee their accuracy. This communication is not an offer or solicitation to purchase or sell any security, and it is not a research report. Individuals should consult with a qualified financial professional before making any investment decisions.