Jay Kaeppel | Apr 04, 2018 11:38AM ET
There are times when the market just moves along from day-to-day and us “junkies” might hang on every move but to the average investor what happens today or tomorrow is really not all that meaningful in the whole big spectrum of things.
And then there are times like now. As you can see in Figure 1, the major market indexes are struggling and are testing their respective 200-day moving averages. How this “dance” plays out may have important implications for virtually all stock market investors.
Figure 1: Courtesy AIQ TradingExpert
First off let me say this: There is nothing “magic” about a 200-day moving average. It was interesting that the other day when the S&P 500 Index closed below its 200-day average (it was the only major index to do so) roughly 22,367 articles appeared on the internet sounding the alarm. Now I do pay a lot of attention to moving averages, but more to get a sense of trend than as automatic buy and sell triggers. Which leads me to invoke:
Actually there are a few others but the most likely outcomes – and the implications – are:
Like I said, this is a critical juncture. Whatever happens, investors need to pay attention and stand ready to, a) do nothing, or, b) take defensive action, or, c) take defensive action and then undo the defensive action and get bullish again (in the event of a whipsaw).
Steady, people, steady
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