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Weak Profiles, And The S&P 500 Moves Above The 200-Day

Chris Ciovacco profile picture
Chris Ciovacco


  • Is the 200-day a magical binary bull/bear level?
  • What happened near the 200-day in 1971, 2011 and 2015?
  • How ugly can drawdowns get in the S&P 500?

Not All Moves Above The 200-Day Are Created Equal

As the historical examples below clearly demonstrate, after a plunge in the stock market and within the context of a still weak long-term trend profile, seeing the S&P (SPY) close above its 200-day moving average is far from an “all clear” signal. As covered in recent CCM weekly videos and shown below, the S&P 500 traded above its 200-day after making a low in October 2011.


Weak Trends And Moves Above The 200-Day

The CCM Trend Strength Model is a major component of the CCM Market Model. Trend strength scores are based on 207 binary questions using data from multiple timeframes. In late October 2011, the S&P 500 closed above a flattish 200-day moving average. However, the trend strength (TS) score was only 9 on a scale of 0 to 100, with 100 being the strongest. With a TS score of 9, the S&P 500 failed to hold above the 200-day and subsequently dropped 9.84%. The TS score of 9 told us the market’s longer-term trend still had some work to do before allowing for a more favorable risk-reward setup. When the market was ready to put together a sustained rally, the TS score was sitting at 82 in late December 2011.


Trends Typically Need Time To Flip

A similar situation occurred following an S&P 500 (VOO) plunge in 2015 - the S&P 500 rallied sharply back to the 200-day moving average.


Closer Look At 2015 Case

The initial push above the orange 200-day in 2015 was marked by eight trading days of gains before the market started to drop back toward the moving average cluster (chart below). The S&P 500 (IVV) closed 2.41% above the point where it crossed the 200-day, telling us short stays and relatively tame moves above the

This article was written by

Chris Ciovacco profile picture
Chris Ciovacco is the founder and CEO of Ciovacco Capital Management (CCM), an independent money management firm serving individual investors nationwide. The thoroughly researched and backtested CCM Market Model answers these important questions: (1) How much should we allocate to risk assets?, (2) How much should we allocate to conservative assets?, (3) What are the most attractive risk assets?, and (4) What are the most attractive conservative assets? Chris is an expert in identifying the best ETFs from a wide variety of asset classes, including stocks, bonds, commodities, and precious metals. The CCM Market Model compares over 130 different ETFs to identify the most attractive risk-reward opportunities. Chris graduated summa cum laude from The Georgia Institute of Technology with a co-operative degree in Industrial and Systems Engineering. Prior to founding Ciovacco Capital Management in 1999, Mr. Ciovacco worked as a Financial Advisor for Morgan Stanley in Atlanta for five years earning a strong reputation for his independent research and high integrity. While at Georgia Tech, he gained valuable experience working as a co-op for IBM (1985-1990). During his time with Morgan Stanley, Chris received extensive training which included extended stays in NYC at the World Trade Center. His areas of expertise include technical analysis and market model development. CCM’s popular weekly technical analysis videos on YouTube have been viewed over 700,000 times. Chris’ years of experience and research led to the creation of the thoroughly backtested CCM Market Model, which serves as the foundation for the management of separate accounts for individuals and businesses. Copy and paste links into your browser: Market Model: http://www.ciovaccocapital.com/sys-tmpl/ccmmarketmodel/ More About CCM: http://www.ciovaccocapital.com/sys-tmpl/aboutus/ YouTube: http://www.youtube.com/user/CiovaccoCapital Twitter: https://twitter.com/CiovaccoCapital CCM Home Page: http://www.ciovaccocapital.com/sys-tmpl/hometwo/

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