Tuesday, March 10, 2009

S&P 500 Moving Averages

Even after today's rally of over 4%, the S&P 500 remains more than 13% below its 50-day moving average (DMA) and over 30% below its 200-DMA. In order to reach the 50-DMA, the S&P would have to rally an additional 15.1%. While a rally of 15% seems within the realm of possibility, the market still has a ways to go if it has any chance of reaching its 200-DMA. With the S&P 500 now trading 32.5% below its 200-DMA of 1,055, it would have to rally by more than 48% to close that gap.

S&P 500 with MA

On a historical basis, the current spread between the S&P 500 and its 200-DMA is near the most negative levels in the index's history. As shown below, when the S&P 500 made its 2008 low on November 20, 2008, the spread between the S&P 500's price and 200-DMA reached -39.5%. The only other time that this level was exceeded was back in late 1931 and early 1932.

SPX 200 MA Spread

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Lunch is for wimps

Lunch is for wimps
It's not a question of enough, pal. It's a zero sum game, somebody wins, somebody loses. Money itself isn't lost or made, it's simply transferred from one perception to another.