Two big asset-classes had major long-term trend reversals today. When a stock or index is trading above its 200-day moving average, it is considered to be in a long-term uptrend. When the price is trading below the 200-day, it is considered to be in a long-term downtrend. Today, the US Dollar index closed above its 200-day for the first time since last May. China's Shanghai Composite Index closed below its 200-day for the first time since last March. The dollar has been rallying for a couple of months now, while China has been struggling, but today's moves are confirmations that the trends could be in place for longer than some thought.
Subscribe to Bespoke Premium to receive more in-depth research from Bespoke.
Is this really a break in the Shanghai Composite? I see it touching the 200 MA merely and being in a downtrend channel. Could still get a rescue bounce, but time will tell.
Posted by: John | January 27, 2010 at 05:39 PM
Could definitely get a bounce, but it closed about 3 points below its 200-day today. That's not much, but it's still a close below.
Posted by: Justin | January 27, 2010 at 05:56 PM
"When a stock or index is trading above its 200-day moving average, it is considered to be in a long-term uptrend."
Nonsense. Utter nonsense. Give me one study or a long run historical evaluation that says buying or selling on a 200 day average will make you money, in anything. Why not 100, 50, 2000, or 2 day? Does your investment group actually use the 200 day moving average for actual investing?
Posted by: Givemeabreak | January 27, 2010 at 06:17 PM
Visit my Blog and see my view on Shanghai Market :
http://www.anirudhsethireport.com/shanghai-composite-2956-is-last-hope/
Posted by: Anirudh Sethi | January 28, 2010 at 09:57 AM
Ditto Givermeabreak's comment
Posted by: Anwiya | January 28, 2010 at 07:43 PM
200 day moving average has served my trading very well for the last 16 years. Superior risk adjusted returns and saved my tukus in 07 & 08. How'd you do lil john
Posted by: dirk | January 29, 2010 at 02:01 AM