FEZ’s moving averages
On November 4, 2015, 65% of the SPDR Euro Stoxx 50 ETF’s (FEZ) portfolio holdings closed above the 100-day moving average—compared to 62% on November 3. It’s important to note that 91% of the fund’s portfolio holdings closed above the 50-day moving average. Meanwhile, 83% of the fund’s portfolio holdings closed above the 20-day moving average on November 4. The change in the 100-day moving average indicates that most of the portfolio holdings are moving towards an uptrend by maintaining the moving average as a strong support point.
Above graph shows the percentage of FEZ’s portfolio holdings that were above the 100-day, 50-day, and 20-day moving averages, respectively.
Banco Santander (SAN) was trading at 5.27 euro. It was above its 50-day and 20-day moving averages of 5.10 euro and 5.16 euro. However, it was trading below its 100-day moving average of 5.70 euro. It indicates that there was a short-term uptrend.
ING Groep (ING) was trading at 13.41 euro. It was above its 50-day and 20-day moving averages of 13.06 euro and 13.03 euro. However, it was below its 100-day moving average of 13.96 euro.
Telefonica (TEF) was trading at 12.35 euro. It was above its 50-day and 20-day moving averages of 11.58 euro and 11.66 euro. However, it was below its 100-day moving average of 12.47 euro. This indicates that there was a short-term uptrend.
What does the moving average indicate?
The “moving average” is the average stock price over a certain period of time. It’s a trend-following indicator. It’s also called the “lagging indicator” because it’s calculated based on past prices.
If the stock price crosses the longer-term moving average, the 100-day moving average, then it indicates an uptrend. 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. In that short-term uptrend, it will maintain the 50-day and 20-day moving averages as a first and second support point.
Support points are the points where the buyers won’t allow the price to go down or the point where more buyers are ready to buy compared to the sellers.
FEZ invests in large-cap stocks like Sanofi (SNY), Total SA (TOT), Banco Santander, Siemens (SIEGY), and Anheuser Busch Inbev (BUD). They represent 5.0%, 4.8%, 3.4%, 3.1%, and 3.6% of FEZ’s portfolio, respectively.
To learn more, read How the ECB statement Affects the World’s Economy. In the next part, we’ll analyze FEZ’s performance with respect to the other ETFs.