Saturday, June 13, 2009

A critical point for the S&P 500

I don't post many stock charts because I don't necessarily believe that they tell you much information. Either the market is trending up or down, depending on time frame. But today I am because the SPY (S&P 500 ETF) is at what is normally a critical point. The 350 day moving average or 70 week moving average is normally a good indicator of bull and bear markets. On Friday, the SPY closed just below this average. For a long term investor, if the 350 day moving average is breached, you have a low risk point of entry with a stop just below the average. If it doesn't breach this average, now is a good time to short the market with a vengeance. That being said, I'm disclosing my position as still currently long because I am trading a shorter term system. But I am cognizant of what is going on here and will likely be switch to leveraged short if the SPY goes below 85.

As you can see, the investor/trader who got out with the major breach of the 350 MA in Dec 2007 would have gotten out of the market around 1400 and would have either been in cash or short the market through today and would be much richer than the typical buy and holder.

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