Aroon Indicator

  

When dogs howl at Luna at night, this is the indicator as to how loud they are barking. Aroooooooooooooon. And it’s also an alien thing, and while this should obviously be some kind of alien detector we can use to out all the extraterrestrials living among us from the planet Aroon, it’s...not that. It’s a measure of how strong the upward (or downward) trend in a stock’s performance is.

The Aroon Up measures the strength of an upward trend while the Aroon Down measures how strong the downward trend is. Each indicator runs from zero to 100 with a strong trend (in either direction) having values closer to 100 and a weaker trend (in either direction) having values closer to zero.

And yes, Aroonians live among us. They’re everywhere...

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finance a la shmoop. how do you judge the performance of an index fund? very

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carefully. actually performance means something very different when it comes

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to an index fund versus an actively managed fund. in an index fund the

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manager doesn't really do anything per se other than rebalance the indices so [man sleeps at a desk]

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that they conform to whatever the product was that you bought in the first

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place. for example a technology index fund might claim that 12% of its

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holdings will have wireless telecommunications related stocks as a

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target, but never less than 10% and never more than 15% .and in most cases the

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actual stocks that go in the fund are identified beforehand like before the [man smiles at camera]

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funds actually really launched. and the relative weightings of those investments

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is also predetermined .ie the fund might target having three percent of its total

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as shares in Verizon. but if Verizon suddenly does extremely well and doubles

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in price in a short period of time well the index fund might have to sell

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shares of that stock so that it's weighted holding amount won't pierce the

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maximum weighting of 15%. but all this relates to the composition of the fund [pie chart]

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not necessarily the performance. since an index fund is a reflection of a given

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area like these examples they conform to a general theme, like the Vanguard total

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stock market index. the broadest based reflection of the overall market. like

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the S&P 500 plus Nasdaq plus the New York Stock Exchange indices or another

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one might be the Vanguard small cap Value Index, largely companies under a

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few billion bucks in market cap which trade at relatively low price to [value index listed]

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earnings ratios ie they are value stocks rather than say growth stocks. all right

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next one might be the Vanguard emerging markets stock index. that one's all about

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third world countries trying to become second worlders how's that Nigerian

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oil exchange looking? or what about investing in Vietnam these days? the

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Napalm is mostly washed away by now. and then move it on. yep there's the Vanguard [sink with the water on]

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intermediate term bond index, and yes there are bond index funds as well.

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intermediate just means that the bonds in this set of bonds mostly come due

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within about five years or so. the bottom line is that an index fund

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isn't really a managed fund. it's just a reflection of whatever group of stocks

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or bonds it is supposed to reflect. so if an index performs poorly, all of the [man holds stock]

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fault lies in the one who chose that particular index fund, not the manager of

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the fund because well there basically wasn't one, so if your fund as poorly and

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