FEZ’s moving averages
From November 3 onward, the SPDR Euro Stoxx 50 ETF’s (FEZ) price has been moving southward. On November 10, it was trading below its 100-day moving average of $36.80 and below its 20-day moving average of $36.40. However, it closed at $35.91, above its 50-day moving average of $35.50.
Although FEZ has been moving below its 100-day and 20-day moving averages in the last three trading sessions, it didn’t fall below its 50-day moving average. By maintaining a 50-day moving average as a strong support point, the ETF traded in a narrow range of $35.90–$36.10.
What does the moving average indicate?
A trend-following indicator, the moving average is the average stock price over a certain period of time. It is also known as a lagging indicator because it is calculated based on past prices.
If the stock price crosses a longer-term moving average—the 100-day moving average—this indicates an uptrend where the moving average is a strong support point. When the stock price crosses the short-term moving averages—either the 50-day or 20-day moving average—it indicates a short-term uptrend. During that short-term uptrend, the 50-day and 20-day moving average provide a first and second support point.
The support point can be the point below which buyers will not allow the price to fall, or it can be the point where more buyers are ready to buy compared to the number of sellers.
As of November 10, the large capitalization stocks held by FEZ included Sanofi (SNY), with a weighted return of -0.15%; Total SA (TOT), with a weighted return of -0.03%; Banco Santander (SAN), with a weighted return of -0.08%; Siemens (SIEGY), with a weighted return of -0.05%; and Anheuser-Busch Inbev (BUD), with a weighted return of -0.02%.
In the final part of this series, we’ll discuss how FEZ performed with respect to its volatility and mean return.