Fred Swartz

Why We Over-Weight Emerging Markets

I have no argument with the emerging markets hypothesis, but perhaps you are reading too much into the simple moving averages. The 200 day SMA of the DIA is still plummeting because the data points that are being dropped 200 days ago are relatively high values from before the Oct 2008 drop, while the recent data points being added are lower. As soon as Sep 08 passes out of the average it will rise dramatically. Equal weighting of old data points in simple moving averages can have very deceptive effects.

Using the 200-day Exponential Moving Average (also from stockcharts.com) gives a different impression, and in the opinion of many, a more reasonable representation of trends.

If you make arguments about the recent behavior of an SMA, as you did, you should at least point out that these changes are due as much to old data as new data.

Not that this has much to do with the main point of your article :-)