Systematic Trader’s will use the 50 day Simple Moving Average as their trading plan. The 50 day moving average is a good trading plan for indexes and ETF’s that have trend following characteristics. It can produce disastrous results if used for every index, ETF, or stock.
Other widely followed moving averages are the 100 day moving average and the 200 day moving average. Some money managers will use these moving averages with a shorter moving average and use the cross of the shorter moving average above or below the longer moving average to generate trading signals. The goal of two moving averages and even 3 moving averages is to eliminate whipsaws that often occur with moving averages as a technical analysis indicator.
Why should you care about the signals produced with the 50 day moving average? There are so many people using the 50 day moving average, that we will often see extreme volatility in indexes when they cross both above and below the 50 day moving average.
The below chart shows the current 50 day simple moving average condition on the 40 most actively traded ETF’s.
|BRIC IShares||Stay Short|
|Coal Power Shares||Stay Long|
|DB Commodity Index||Stay Short|
|Diamond Trust DOW||Stay Long|
|Energy Select SPDR||Stay Short|
|Internet Holders||Stay Long|
|IPath India Index||Stay Long|
|IShare Russell 2000||Stay Long|
|IShares 25 Index||Stay Short|
|IShares Australia||Stay Short|
|IShares Basic Materials||Stay Long|
|IShares DJ Real Estate||Stay Long|
|Ishares DJ Transportation||Stay Long|
|IShares Financial Sector||Stay Short|
|IShares Germany||Stay Short|
|IShares Hong Kong||Stay Short|
|IShares Latin America||Stay Short|
|IShares Mexico||Stay Long|
|IShares Mid Cap 400||Stay Long|
|IShares MSCI EAFE||Stay Short|
|IShares MSCI Japan||Stay Long|
|IShares Pacific ex Japan||Stay Short|
|IShares S&P 500 Growth||Stay Long|
|Ishares S&P Small Cap 600||Stay Long|
|IShares Silver||Stay Short|
|IShares South Africa||Stay Long|
|IShares Taiwan||Stay Short|
|IShares United Kingdom||Stay Short|
|NDX 100||Stay Long|
|Oil Service Holders||Stay Short|
|Pharmaceutical Holders||Stay Long|
|S&P 500||Stay Long|
|Semiconductor Holders||Stay Long|
|SPDR Consumer Descretionary||Stay Long|
|SPDR Consumer Staples||Stay Short|
|SPDR Gold Shares||New Long|
|SPDR Healthcare||Stay Long|
|SPDR Indutrial Sector||Stay Long|
|SPDR International Real Estate||Stay Short|
|SPDR Materials||Stay Long|
|SPDR Metal & Mining||Stay Long|
|SPDR Mid Cap||Stay Long|
|SPDR S&P Homebuilders||Stay Long|
|SPDR Technology||Stay Long|
|Steel Market Vector||Stay Long|
|US Oil||Stay Short|
You should not trade any systematic trading plan without proper back testing and analysis of the trading characteristics of the index, stock or ETF you are trading.
These trading signals are provided courtesy of the website you are viewing this information should not be used without research and advice from a financial professional.
Be aware that this condition can and will change any day in the future.
We monitor the 50 day moving average daily along with a number of other systematic trading plans.
There is No “Holy Grail” in trading systems. Do not use the 50 day SMA or any other systematic trading system without proper research on the asset.
For questions on rule based, systematic trading, contact email@example.com