As many of you know, I have set up a blog on my website where I frequently share my thoughts on the market. I am often asked why I always talk about the 200 day SMA and refer to it as the “line in the sand”. First off, let me explain what the 200 day SMA is. SMA stands for Simple Moving Average. The 200 day SMA represents the trend line of the stock market, index, stock, or whatever one wants to track (in this case, the S&P 500 index). The majority of investors and traders use this average as a guide to indicate if the market is in a rising or declining trend. If the market is trading above the 200 day SMA, then investors read that as a bullish indicator (meaning they expect the market to rise). If the market is below the average, then investors are typically bearish and expect the market…

April 1st, 2010
Money maker
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