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Weighing The Week Ahead: Should Investors Worry About The 200-Day Moving Average?

Jeff Miller profile picture
Jeff Miller


  • The market is flat, fighting technical resistance.
  • Economic data and earnings news are taking a back seat to more sensational stories.
  • Using technical resistance has advantages and disadvantages for the individual investor.
  • Those focused on fundamental valuation can find plenty of opportunities.
  • Some method of ultimate risk control is essential for investors to "stay the course" during normal fluctuations.

We have a normal economic calendar, and 1/3 of S&P 500 companies have not yet reported Q418 earnings. Corporate earnings are not confirming those who thought the market was signaling a recession. Both the economy and earnings remain in the background. Daily market moves, even small ones, and the often-erroneous explanations dominate the financial news. The market story has become the battle of the 200-day moving average.

I consulted Mrs. OldProf about today’s theme. I asked which was most interesting: The Super Bowl offensive show, the State of the Union and commentary, or whether we broke the 200-day moving average? Her response was not helpful.

Since I have a lot of good material this week, I wish I could attract more readers with a great title. I wish I could include Virginia resignations, Jeff Bezos, or scandalous pictures. Instead, I find myself asking:

Should long-term investors trade the 200-day moving average?

This dull-sounding question is actually quite important for the individual investor.

Last Week Recap

In my last edition of WTWA I noted the light economic calendar and big earnings week. It was a good opportunity for investors to consider the evidence more deeply, looking beyond the most obvious headline stories. The concept was good enough, but the competing political and sex stories were too attractive. Real financial news took second seat. This may continue in the week ahead, but focused investors can use that as an opportunity.

The Story in One Chart

I always start my personal review of the week by looking at a great chart. This week I am featuring Jill Mislinski. She includes a lot of relevant information in a single picture – worth more than a thousand words. Read the full post for more great charts and background analysis.

A close up of a map Description automatically generated

Stocks were unchanged on the week

This article was written by

Jeff Miller profile picture
Seeking Alpha mourns the passing of Jeff Miller, on May 7, 2021. During his time at Seeking Alpha, Jeff attracted a following of close to 40,000 readers and published more than 1,500 articles. He was a portfolio manager at Incline Investment Advisors, LLC. Jeff also was President of NewArc Investments, Inc., and served as a university professor.....................................................................................................................................Jeff is Portfolio Manager for Incline Investment Advisors, LLC.,manager of both individual and institutional investments. A registered investment advisor, he was formerly President of NewArc Investments, Inc. Jeff is a former college professor with a hands-on, real world attitude. His quantitative modeling helped inform state and local officials in Wisconsin for more than a decade. A Public Policy analyst, he taught advanced research methods at the University of Wisconsin, and analyzed many issues related to state tax policy. Jeff began in the financial business as Research Director for a trading firm at the Chicago Board Options Exchange. He investigated anomalies in the standard option pricing models, taught classes for beginning options traders, and developed new forecasting techniques. In 1991 he established a general research consultancy, working with professional traders at all of the Chicago financial exchanges. In 1998 he started NewArc Investments, Inc. Jeff has a commitment to the specific needs of individual investors. It is not a one-size-fits all approach, but one that emphasizes the unique circumstances of each client. Jeff also serves on the board of a small technology company. He occasionally serves as an expert witness in legal cases involving financial markets and hedging.

Analyst’s Disclosure: I am/we are long CVS, CELG. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

CVS versus short, near-term calls.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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