SPY - S&P500 SPDR: This “trust” is comprised of the 500 stocks in the S&P 500 Index, an index designed to capture the price performance of a large cross-section of the U.S publicly traded stock market. The S&P 500 has better diversification than the widely followed DJIA and NASDAQ markets. The main objective of SPY is to replicate the total return of the S&P 500 500 Index.
This chart shows the S&P500 via its ETF (exchange traded fund) SPY has corrected back to its 50 day moving average or MA(50) on this chart.
After an “Auto Buy” for 40 shares at $127.50 on 6/2/12, on 1/18/13, I sent an email alert saying I took profits at $147.55 to lock in a $20.05 or $15.3% gain including commissions. Now I have ammunition to buy these shares back if the market corrects. My “break-even” price for my 130.723 shares of SPY in my “explore portfolio” is now only $104.25 per share as I reinvest dividends and trade the volatility.
My chart shows SPY tested the breakout from above and moved to a new high, which is very bullish. My chart below shows SPY adjusted for dividends experienced a 20.9% bear market in 2011 and two corrections below the 200-DMA in 2012 of the typical 7 to 16% variety that are painful, but often “health restoring.” I expect either of the two dashed green support lines on my graph will contain any corrections from here.
- From http://www.sectorspdr.com at $155.48, the dividend yield for SPY is 1.78%
(3/15/13 quarterly dividend was $0.69)
- The 10-year US Treasury currently has a yield of only 1.73%
See US Treasury Rate Quotes at http://verybestcdrates.com/Bonds/US_Treasury_Rates_Quotes.html
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If stocks go nowhere for the next 10 years, they could still outperform a 10-year treasury held to maturity since SPY can pay a higher and growing dividend. If we have a large recession, then stocks may go significantly lower, but in the next decade, stocks should significantly outperform a 10-year treasury, especially if you reinvest stock dividends.
On a personal note: In October 2008 I bought 115 shares of SPY at $87.54 to help rebalance my personal core portfolio at a time I needed to add some large cap equities in a taxable account. I may never sell this position, especially if the reinvested dividends continue to receive a favorable tax rate.
More SPY Charts and a current Quote
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