TALKING TECHNICALS: Expect volatility
Risks are rising, and the recent gains on the S&P 500 suggest a bear market rally
The sharp sell-off at the end of 2018 resulted in the S&P 500 trading below its 50-week moving average (MA) for the first time since 2015.This is significant as the 50-week MA has been a reliable indicator of bull and bear markets. The long-term chart illustrated here goes back to 1998. Over that period, there have been six turning points from bull to bear markets and vice versa. The thinking is that a bull market is indicated by an upward sloping 50-week MA and a bear market by a downward sloping 50-week MA.You can see that the 50-week MA turned lower at the peak of the bull markets in 2000 and 2007. Similarly, the 50-week MA turned positive in 2003 and 2009 to indicate the start of new bull markets that ran for several years.In 2015 there was a brief blip where the 50-week MA turned negative, but that didn’t last long after the US Federal Reserve announced the continuation of aggressive stimulus measures for the US economy.The 20% sell-off witnessed on the S&P 500 at the end of 20...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.