Friday, December 18, 2009

200 Days Since March 6th Bottom

Just a quick note to inform those who follow such things that today marks 200 trading days since the March 6th bottom.

Among other things, this means that for those who watch the 200 day moving average, these averages are going to start to accelerate their already rapid upward move, as old lows begin to scroll off of the lookback window. In order to show how quickly the 200 day MA is moving, two months ago the S&P 500 index was just about exactly where it is now. At the time, the index was more than 20% above its 200 day MA of about 909, which I took as a signal that equities were getting overheated. Fast forward two months and with the SPX at the same level, the index is now only 13% above the 200 day MA, which is currently at 969 and is advancing at a rate of more than two points per day.

Bulls will probably interpret a rising 200 day MA as an indication that support levels are rising. Bears will undoubtedly see any sort of convergence with the 200 day MA level as a sign that the distance to a bear market is decreasing. For now I am in the bull camp, but an extended range-bound drift is starting to look increasingly likely.

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