Economy

Watching Shares of Vanguard Russell 1000 Index Fund (VONE) — Technical Focus

Traders will most likely be honing their strategies that they created, trying to beat the market over the next couple of months. This may be the case, but sometimes it might be good fortune. Turning available information into a winning portfolio is where the good investor can become a great investor. On the other end of the spectrum, having too much self-doubt may leave an investor with way too many what ifs. Many investors may be hesitant to get into the mix with markets still trading at such high levels. Finding that flawless balance between the needed gusto and the correct amount of caution may help ease the burden moving forward in the equity market.

When undertaking stock analysis, investors and traders may choose to view multiple technical levels.

At the time of writing, the 14-day ADX for Vanguard Mid Cap Value Index Fund (VOE) is 11.79. Developed by Donald Lambert, the CCI is a versatile tool that may be used to help spot an emerging trend or provide warning of extreme conditions. Different time periods may be used when using the RSI indicator. CCI is relatively high when prices are much higher than average, and relatively low when prices are much lower than the average.

Technical traders have a large inventory of technical indicators they may use when doing technical stock analysis. Taking a glance at the relative strength indictor, we note that the 14-day RSI is now at 76.23, the 7-day stands at 89.33, and the 3-day is sitting at 97.32. A value of 25-50 would indicate a strong trend. A value of 25-50 would indicate a strong trend. The ADX is typically plotted along with two other directional movement indicator lines, the Plus Directional Indicator (+DI) and Minus Directional Indicator (-DI).

Another technical indicator that might serve as a powerful resource for measuring trend strength is the Average Directional Index or ADX. Using the CCI as a leading indicator, technical analysts may use a +100 reading as an overbought signal and a -100 reading as an oversold indicator, suggesting a trend reversal. As a momentum indicator, the Williams R% may be used with other technicals to help define a specific trend. Vanguard S&P Small-Cap 600 Growth Index Fund (VIOG) now has a 14-day Commodity Channel Index (CCI) of 111.39. Generally, the RSI is considered to be oversold when it falls below 30 and overbought when it heads above 70. A reading under 30 may indicate that the stock is oversold, and possibly undervalued.

Vanguard Small-Cap Index Fund (VB)'s Williams Percent Range or 14 day Williams %R now sits at -7.53.

"The MESA Adaptive Moving Average (MAMA) adapts to price movement based on the rate of change of phase as measured by the Hilbert Transform Discriminator (Technical Analysis of Stocks and Commodities magazine, December 2000)". The support line generally displays the lowest price that investors will let a stock trade. The RSI oscillates on a scale from 0 to 100. The RSI operates in a range-bound area with values between 0 and 100. If the RSI is closer to 100, this may indicate a period of stronger momentum. Losing trade signals occur when crossovers occur in rapid succession due to choppy price action. The RSI was created by J. Welles Wilder who was striving to measure whether or not a stock was overbought or oversold.

Looking further at additional technical indicators we can see that the 14-day Commodity Channel Index (CCI) for Vanguard S&P Small-Cap 600 Index Fund (VIOO) is sitting at 128.07.

Taking a peek at some Moving Averages, the 200-day is at 2.75, and the 50-day is 2.86.

Tracking moving averages is one of the most universally used techniques for performing technical stock analysis. Using a wider time frame to assess the moving average such as the 200-day, may help block out the noise and chaos that is often caused by daily price fluctuations. Using the ADX with the Plus Directional Indicator (+DI) and Minus Directional Indicator (-DI) may help determine the direction of the trend as well as the overall momentum. Because MACD uses moving averages and moving averages lag price, signal line crossovers can come late and affect the reward-to-risk ratio of a trade.



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