Systematic Trader’s and Market Timing traders may use the 50 day Simple Moving Average as their trading plan. The 50 day moving average is basic technical analysis. It is a good market timing trading plan for active trading in indexes and ETF’s that have trend following characteristics. It can produce disastrous results if used for every stock 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 50 most actively traded ETF’s.
|Barclays High Yield Bond||Stay Short||JNK|
|BRIC IShares||Stay Short||BKF|
|Coal Power Shares||Stay Short||PKOL|
|DB Commodity Index||Stay Short||DBC|
|Diamond Trust DOW||Stay Short||DIA|
|Energy Select SPDR||Stay Short||XLE|
|Internet Holders||Stay Short||HHH|
|IPath India Index||Stay Short||INP|
|IShare Russell 2000||Stay Long||IWM|
|IShares 25 Index||Stay Short||FXI|
|IShares Australia||Stay Short||EWA|
|IShares Basic Materials||Stay Short||IYM|
|IShares DJ Real Estate||Stay Long||IYR|
|Ishares DJ Transportation||Stay Long||IYT|
|Ishares Emerging Markets||Stay Short||EEM|
|IShares Financial Sector||Stay Long||IYF|
|IShares Germany||Stay Short||EWG|
|IShares Hong Kong||New Long||EWH|
|IShares Latin America||Stay Short||ILF|
|IShares Mexico||Stay Short||EWW|
|IShares Mid Cap 400||Stay Long||IJH|
|IShares MSCI EAFE||Stay Short||EFA|
|IShares MSCI Japan||Stay Short||EWJ|
|IShares Pacific ex Japan||Stay Short||EPP|
|IShares S&P 500 Growth||Stay Short||IVW|
|Ishares S&P Small Cap 600||Stay Long||IJR|
|IShares Silver||Stay Short||SLV|
|IShares South Africa||Stay Short||EZA|
|IShares South Korea||Stay Short||EWY|
|IShares Taiwan||Stay Short||EWT|
|IShares United Kingdom||Stay Short||EWU|
|NDX 100||Stay Short||QQQQ|
|Oil Service Holders||Stay Short||OIH|
|Pharmaceutical Holders||Stay Short||PPH|
|PowerShares US Dollar Index||Stay Long||UUP|
|RYDEX S&P 500 Equal Weight||Stay Long||RSP|
|S&P 500||Stay Short||SPY|
|Semiconductor Holders||Stay Short||SMH|
|SPDR Consumer Descretionary||Stay Long||XLY|
|SPDR Consumer Staples||Stay Long||XLP|
|SPDR Gold Shares||New Long||GLD|
|SPDR Healthcare||Stay Short||XLV|
|SPDR Industrial Sector||Stay Long||XLI|
|SPDR International Real Estate||Stay Short||RWX|
|SPDR Materials||Stay Short||XLB|
|SPDR Metal & Mining||Stay Short||XME|
|SPDR Mid Cap||Stay Long||MDY|
|SPDR S&P Homebuilders||Stay Long||XHB|
|SPDR Technology||Stay Short||XLK|
|Steel Market Vector||Stay Short||SLX|
|US Oil||Stay Long||USO|
|Wisdom Tree Total Dividend||Stay Short||DTD|
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