Portfolio update

Buying Morgan Stanley China A Share Fund (CAF)

I refer to a previous post dated August 2, in which I said that I was getting prepared to buy the Morgan Stanley China A Share Fund (CAF). This time has come. I am buying CAF today for my portfolio at a price of $29.38 for a total of $10,000. Stop loss: $22.0

US Dollar Index

The US Dollar index moved sharply higher yesterday. It rebounded on its support at $80.
A bullish divergence had been building between the price and the MACD, announcing this move higher. Additionally the USD index was very oversold and a retracement made sense. However, according to my system, as long as the 20 day moving average will not cross the 50 day moving average to the upside, I stay bearish.

S&P500 index: buy signal

I use a simple system to tell me whether it is time to buy or sell the S&P 500 index (this index is a good proxy for the stock markets in general):

1) First filter: I go long only if the price is above the 200 day moving average (MA), i.e. the blue line on the chart. And I only go short if the price is below the 200 day MA.

2) Second filter: If the 20 day MA (pink line on the chart) crosses the 50 day MA (yellow line on the chart) to the upside, it is a buy signal. To the opposite, if the 20 day MA crosses the 50 day MA to the downside, it is time to sell.
This system worked pretty well in the past as you can see on the chart above

Yesterday the S&P500 index moved above the 200 day MA: first condition met. And two days ago, the 20 day MA crossed the 50 day MA to the upside: 2nd condition met. Buy signal was therefore activated.

Morgan Stanley China A Share Fund (CAF)

I refer to my previous post on the Shanghai stock market, where I mentioned my interest to invest in China at this point in time. To gain exposure to this market, I am planning to buy for the portfolio the Morgan Stanley China A Share Fund, Inc (ticker: CAF) listed on the New York Stock Exchange. The Fund invests at least 80% of its assets in A-shares of Chinese companies listed on the Shanghai and Shenzhen Stock Exchanges.

Below a weekly chart of the Shanghai Se Composite index. 

And here the weekly chart of Morgan Stanley China A Share Fund:

The price of CAF has broken the 40 week (= 200 day) moving average to the upside. I am getting prepared to buy...

Portfolio update