Moving Averages on the Index

How traders use the 50-day and 200-day moving averages on the S&P 500, and what 20 years of SPY data say about the 200-day line.

Two lines most traders watch

The 50-day moving average tracks the intermediate trend. The 200-day moving average tracks the long-term trend. When the index is above both and both are rising, the market is healthy. When it falls below the 50-day, the trend is weakening. A close below the 200-day often marks a correction or worse.

When the 50-day crosses above the 200-day, people call it a “golden cross.” When it crosses below, a “death cross.” Both are slow, lagging signals; they usually happen well after the turn.

Healthy uptrend: price above a rising 50-day, which is above a rising 200-day.

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