Today’s large losses in the S&P 500, Dow, and Nasdaq brought those indexes and many others below their 200 day moving averages. Most Indexes closed at or near their lows of the day. The 3 major Indexes are negative for the year. Many other Indexes we track also fell below or are close to failing below the 200 day moving average. Traders using this as their only indicator are being whipsawed.
At Seleznov Capital Advisors we watch these key levels to see the Index breaks down or the trend continues up. You can get these trading alerts nightly from our Daily Trading Signals Service.
System Trader’s and Market Timing traders may use the 200 day Simple Moving Average as their trading plan. The 200 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 50 day moving average and the 100 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 Wall Street Journal displays a 65 Day Moving Average in their charts. 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 200 day moving average? There are so many people using the 200 day moving average, that we will often see extreme volatility in indexes when they cross both above and below the 200 day moving average. It has been reported that Endowments like Harvard and Yale use the 200 Day Moving Average in modeling their portfolios.
The below chart shows the current 200 day simple moving average condition on over 50 most actively traded ETF’s.
|Barclays High Yield Bond||Stay Long||JNK|
|BRIC IShares||New Short||BKF|
|Coal Power Shares||Stay Short||PKOL|
|DB Commodity Index||Stay Short||DBC|
|Diamond Trust DOW||New Short||DIA|
|Energy Select SPDR||Stay Short||XLE|
|Internet Holders||Stay Short||HHH|
|IPath India Index||Stay Long||INP|
|IShare Russell 2000||New Short||IWM|
|IShares 25 Index||Stay Short||FXI|
|IShares Australia||Stay Short||EWA|
|IShares Basic Materials||New Short||IYM|
|IShares DJ Real Estate||Stay Long||IYR|
|Ishares DJ Transportation||Stay Long||IYT|
|Ishares Emerging Markets||New Short||EEM|
|IShares Financial Sector||Stay Short||IYF|
|IShares Germany||New Short||EWG|
|IShares Hong Kong||Stay Long||EWH|
|IShares Latin America||New Short||ILF|
|IShares Mexico||Stay Long||EWW|
|IShares Mid Cap 400||New Short||IJH|
|IShares MSCI EAFE||Stay Short||EFA|
|IShares MSCI Japan||Stay Short||EWJ|
|IShares Pacific ex Japan||New Short||EPP|
|IShares S&P 500 Growth||New Short||IVW|
|Ishares S&P Small Cap 600||New Short||IJR|
|IShares Silver||Stay Long||SLV|
|IShares South Africa||Stay Long||EZA|
|IShares South Korea||Stay Long||EWY|
|IShares Taiwan||Stay Long||EWT|
|IShares United Kingdom||New Short||EWU|
|NDX 100||New Short||QQQQ|
|Oil Service Holders||Stay Short||OIH|
|Pharmaceutical Holders||Stay Short||PPH|
|PowerShares US Dollar Index||New Long||UUP|
|RYDEX S&P 500 Equal Weight||New Short||RSP|
|S&P 500||New Short||SPY|
|Semiconductor Holders||New Short||SMH|
|SPDR Consumer Descretionary||Stay Long||XLY|
|SPDR Consumer Staples||New Short||XLP|
|SPDR Gold Shares||Stay Long||GLD|
|SPDR Healthcare||Stay Short||XLV|
|SPDR Industrial Sector||Stay Long||XLI|
|SPDR International Real Estate||Stay Long||RWX|
|SPDR Materials||New Short||XLB|
|SPDR Metal & Mining||Stay Short||XME|
|SPDR Mid Cap||New Short||MDY|
|SPDR S&P Homebuilders||Stay Short||XHB|
|SPDR Technology||New Short||XLK|
|Steel Market Vector||New Short||SLX|
|US Oil||Stay Short||USO|
|Wisdom Tree Total Dividend||New Short||DTD|
You should not trade any system 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 200 day moving average daily along with a number of other system trading plans.
There is No “Holy Grail” in trading systems. Do not use the 200 day SMA or any other system trading system without proper research on the asset.
For questions on rule based, system trading, contact