Highest Gap Above 200-DMA Since 2013

Not only has the market’s rally been impressively upward, but it’s been impressively calm. As a result, the S&P 500 has been above its 200-Day Moving Average almost nonstop for nearly two years.

As I’ve written before, the 200-DMA isn’t bad for tracking the market. It’s a good example of a dumb rule that works for very smart reasons. The reason is because the S&P 500 tends to be very trend-sensitive. The hard part, quite naturally, is spotting the turning points.

Here’s me from a few years ago:

Since the beginning of 1933 to yesterday, the S&P 500 has traded above its 200-DMA 67.8% of the time. It’s traded below the 200-DMA the other 32.2% of the time. When the S&P 500 is above its 200-DMA, it’s risen by an annualized rate of 11.29%. But when it’s below the 200-DMA, it’s fallen at an annualized rate of -1.06%.

Here’s a look at the S&P 500 and its distance from the 200-DMA. On Friday, we got to more than 12% above the 200-DMA. That’s the biggest gap in nearly five years.

Posted by on January 22nd, 2018 at 2:34 pm


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