Weighing the Week Ahead: Should Investors Worry about the 200-day Moving Average?

We have a normal economic calendar, and 1/3 of S&P 500 companies have not yet reported Q418 earnings. Corporate earnings are not confirming those who thought the market was signaling a recession. Both the economy and earnings remain in the background. Daily market moves, even small ones, and the often-erroneous explanations dominate the financial news. The market story has become the battle of the 200-day moving average.

I consulted Mrs. OldProf about today’s theme. I asked which was most interesting: The Super Bowl offensive show, the State of the Union and commentary, or whether we broke the 200-day moving average? Her response was not helpful.

Since I have a lot of good material this week, I wish I could attract more readers with a great title. I wish I could include Virginia resignations, Jeff Bezos, or scandalous pictures. Instead, I find myself asking:

Should long-term investors trade the 200-day moving average?

This dull-sounding question is actually quite important for the individual investor.

Last Week Recap

In my last edition of WTWA noted the light economic calendar and big earnings week. It was a good opportunity for investors to consider the evidence more deeply, looking beyond the most obvious headline stories. The concept was good enough, but the competing political and sex stories were too attractive. Real financial news took second seat. This may continue in the week ahead, but focused investors can use that as an opportunity.

The Story in One Chart

I always start my personal review of the week by looking at a great chart. This week I am featuring Jill Mislinski. She includes a lot of relevant information in a single picture – worth more than a thousand words. Read the full post for more great charts and background analysis.


Stocks were unchanged on the week and the trading range was only 2.1%. You can see the volatility results and comparisons in our indicator snapshot (below).


The Visual Capitalist illustrates the same problem we have in the investment world by considering crime statistics. There is a persistent belief that crime is more prevalent, despite FBI data.