S&P 500 Falls Below 200-Day Moving Average

[On the Road]

If this price level holds, it's a big thing. The 200-day moving average is an important level of support, and often divides a long uptrend from a long downtrend.

The S&P 500 is important because it represents 3/4 of the money in the US stock market. The NASDAQ, which often leads market trends, has already been below the 200-day MA for a week or so.




In the last hour, there seems to be a rally, which could be a bounce off the average. These things are never exact. So we'll see. But this is a critical junction.

[ringmastery]

1. that's if you are believer in technical analysis

a lot of people think the chart stuff is all crap.

[On the Road]

2. I Used to Think That, Too

back in my fundamental analysis days.

But fundamentals are only as good as the historical information and projections they're based on. I kept getting buskwhacked by announcements that weren't public information when Ii bought. But many of these moves could be anticipated through technical breakdowns.

Once you see how often technicals foreshadow fundamental changes, it's difficult to dismiss them. Uptrends in with the the pullbacks consistently hitting the 13-day EMA on low volume. Resistance points that consistently provide a ceiling, but once they're broken, provide a floor.

Look at the patterns on Clearstation. You see variations of these over and over.

The 200-day moving average is a big, long-term threshold. It's not broken with conviction yet. What will be more convincing is if the average rises, hits the line, and begins to fall again. That means a downtrend has started, and the average has turned into resistance.

[ringmastery]

5. thanks for the link, interesting site

do you have any recommendations for good books on technical analysis?

[On the Road]

6. I've Never Actually Read a Book on Technical Analysis

Most of it I know from sources like Clearstation -- they have the best exposition of the basic patterns I know of on the web. They also have a good discussion board, especially for the NASDAQ, which I used to read daily when I traded more actively.

Another site I like is Decisionpoint. It's a pay site, but they have a free section, including "Chart Spotlite", where Swedlin, who's a real expert, shows how he picks out and interprets certain statistics.

Another site I like is Crosscurrents. Click on the "Pictures of a Stock Market Mania," which is updated every three months. They have some public analysis, even though what's on the front page is not always up to date.

Technicals sound like smoke and mirrors, but they're not. One reason is that markets move first based on private information (a lot of it insider trading) which you really need to make the best decision. Other than having private sources, the next best thing is to see where the market is actually going -- to do that you need to separate the noise from the signal.

On Edit: And BTW, thanks for being open-minded. :toast:

[specimenfred1984]

7. I do, check out Linda Raschke's Site

http://www.lbrgroup.com/

[mastein]

3. This is some of the best news I have had in a while

A down market both over the term and the election year is a great way to get voted out of office. Net jobs, and both the 4 year and 1 year market indexes, are working against the incumbent. All worrisome signs for the Shrubbery.

[On the Road]

4. Yes, I Think One Reason Al Gore Didn't Do Better

is because of the huge market implosion during 2000. For some reason, I never hear this mentioned.

Definitely bad news for Bush.