FTSE Developed Markets Vanguard (VEA): What Are the Charts Indicating? – Wagner Review

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The Money Flow Index of FTSE Developed Markets Vanguard (VEA) this week has placed the shares on the radar as it nears the key 70 or 80 level.  At the time of writing the MFI is holding above 60 and trending higher for the name.  The Money Flow Index creates a ratio of Positive Money Flow and Negative Money Flow over time and scales it to a number between 0 and 100. The MFI value can be used to evaluate overbought and oversold conditions in a security the index moves above or below a certain reference level. Divergence between MFI and the price direction can also be indicative of a reversal. If price is trending higher and MFI is decreasing over that period, a market top may occur.

One way to completely avoid market mistakes is to not invest at all. Of course, that could end up to be the greatest mistake of all. Investors will occasionally make some mistakes, as that comes with the territory. The key as with most things in life is to figure out how to learn from past mistakes and use that knowledge to make better decisions going forward. Pinpointing exactly what went wrong may help shed some light on what needs improvement. Sometimes, investors will suffer losses and become discouraged right out of the gate. The tendency is to then try to recoup losses by taking even bigger risks which can lead to complete disaster. One of the biggest differences between successful investors and failed investors is the willingness and ability to learn from past personal mistakes.

Taking a deeper look into the technicals, FTSE Developed Markets Vanguard (VEA) currently has a 50-day Moving Average of 41.21, the 200-day Moving Average is 40.56, and the 7-day is noted at 40.79. Following moving averages with different time frames may help offer a wide variety of stock information. A longer average like the 200-day may serve as a smoothing tool when striving to evaluate longer term trends. On the flip side, a shorter MA like the 50-day may help with identifying shorter term trading signals. Moving averages may also function well as a tool for determining support and resistance levels.

Traders may be relying in part on technical stock analysis. FTSE Developed Markets Vanguard (VEA) currently has a 14-day Commodity Channel Index (CCI) of 167.83. Despite the name, CCI can be used on other investment tools such as stocks. The CCI was designed to typically stay within the reading of -100 to +100. Traders may use the indicator to determine stock trends or to identify overbought/oversold conditions. A CCI reading above +100 would imply that the stock is overbought and possibly ready for a correction. On the other hand, a reading of -100 would imply that the stock is oversold and possibly set for a rally.

At the time of writing, the 14-day ADX for FTSE Developed Markets Vanguard (VEA) is 19.02. Many technical chart analysts believe that an ADX value over 25 would suggest a strong trend. A reading under 20 would indicate no trend, and a reading from 20-25 would suggest that there is no clear trend signal. The ADX is typically plotted along with two other directional movement indicator lines, the Plus Directional Indicator (+DI) and Minus Directional Indicator (-DI). Some analysts believe that the ADX is one of the best trend strength indicators available.

The Relative Strength Index (RSI) is one of multiple popular technical indicators created by J. Welles Wilder. Wilder introduced RSI in his book “New Concepts in Technical Trading Systems” which was published in 1978. RSI measures the magnitude and velocity of directional price movements. The data is represented graphically by fluctuating between a value of 0 and 100. The indicator is computed by using the average losses and gains of a stock over a certain time period. RSI can be used to help spot overbought or oversold conditions. An RSI reading over 70 would be considered overbought, and a reading under 30 would indicate oversold conditions. A level of 50 would indicate neutral market momentum. The 14-day RSI is currently sitting at 59.86, the 7-day is at 73.32, and the 3-day is spotted at 94.02.

With the stock market trading at current levels, investors may be tossing around ideas about how to trade the next few quarters. As we slip further into the second half of the year, investors may be assessing the latest earnings reports and trying to calculate the future prospects of certain stocks. Finding bargain stocks at current levels may be much harder than spotting hidden gems when markets are down. Plowing through the fundamentals may help sort out some of the questions that investors may have that come along with trading at these levels. Investors may have to do a little more homework in order to identify that next great trade, but the rewards may be well worth the extra time and effort.

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