VXF - My Current View Of The Market: May 2024 Edition (Technical Analysis)

2024-05-01 11:55:38 ET

Summary

• I use technical analysis to determine how to allocate money in my retirement account for May.
• I use the 10-month EMA and relative strength ratios to determine which ETFs to invest in.
• SPY, VXF, and EFA are in bullish alignment and are viable candidates for investment, while AGG is in bearish alignment and should be avoided.

In this article, I outline how I will allocate the money in my retirement account for the month of May. I use a technical analysis approach consisting of the 10-month exponential moving average ((EMA)) and a relative strength ratio to determine where my money will go among four ETF choices: SPDR S&P 500 ETF ( SPY ), Vanguard Extended Market Index Fund ( VXF ), iShares MSCI EAFE ETF ( EFA ), and iShares Core U.S. Aggregate Bond ETF ( AGG ). My retirement account only offers me those four ETFs, plus cash. I have two objectives with this retirement account. The first objective is to make money, and the second objective is to outperform the SP 500 index. I want to achieve these objectives as simply as possible, which is why I like to use the 10-month EMA crossover as my strategy. I look to be long the ETFs that are trading above the 10-month EMA, and I look to be out of the ETFs that are trading below the 10-month EMA. It’s a simple strategy that allows me to stay in long term uptrends and keeps me out of long term downtrends, avoiding massive drawdowns. The 10-month EMA is a long term moving average similar to the 200-day moving average using a daily chart, which many people are familiar with. This strategy is not guaranteed to work every time, but I don’t know of a strategy that does work every time. I use the relative strength ratios to determine which ETFs are the strongest, as that’s where I want to allocate my money. Let’s get the current view of the market....

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