A fascinating chart

Quite often I play with graphs by adding indicators and see what happens. What kind of patterns are going to appear? Are they trying to tell me something?

This chart is fascinating (click on the chart to enlarge it). It has been drawn using Google Finance with a moving average under the graph of the S&P 500.

Note how this moving average has been a great support for the index since 1985. Then, in 2000, the index broke below the moving average until 2003. Then it moved above until 2007. Now is trying to move above the average, but the market is having some problems. A decisive move of the S&P 500 above 1225 could be very bullish for stocks.

Of course, using moving averages is not the most profitable way to invest. Sometimes, however, they help giving some perspective on where we are and where we are going.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest

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