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Better Than The Exchange Traded Fund

07/28/10 08:12:57 AM
by Koos van der Merwe

Exchange traded funds are designed to follow the indexes. Here is a product that could be an ETF, but performs better.

Security:   BX
Position:   Buy

Blackstone (BX) is a global investment and advisory firm, and like all investment companies, trended down with the indexes. Their portfolio companies employ nearly a million people around the world, making them a major factor in world economies. Blackstone completed its initial public offering in June 2007. My charts for them, however, only go back to August 2009.

FIGURE 1: BX VS. SPX. Relative performance of Blackstone to the S&P 500.
Graphic provided by: MetaStock.
Figure 1 is a relative performance chart showing the performance of the company as compared to the Standard & Poor's 500. The chart shows how BX closely follows the trend of the S&P 500 up until November 2009, when it began to outperform the index, even though the general trend followed that of the index. This suggests that the recovery could be faster than the index.

FIGURE 2: BX, DAILY. Daily chart of Blackstone showing an inverse head & shoulders formation.
Graphic provided by: AdvancedGET.
Figure 2, a daily chart of BX, shows how the ticker has formed an inverse head & shoulders pattern, suggesting a target of $12.43. The relative strength index (RSI) shown confirms the uptrend.

Blackstone Group, as mentioned, is a global investment company. It is not an exchange traded fund (ETF), yet it follows the general trend of the S&P 500, and the performance chart shows that it does in fact perform better than the S&P 500. With the expected recovery in the market, if we therefore chose to follow the trend, this is a share that we could hold.

Koos van der Merwe

Has been a technical analyst since 1969, and has worked as a futures and options trader with First Financial Futures in Johannesburg, South Africa.

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