Stocks & Commodities V. 23:7 (97): At The Close by Jayanthi Gopalakrishnan
It doesnít hurt to remember that the simplest of indicators can provide a great deal of information. Iím looking at the daily chart of the Standard & Poorís 500 index when I say this because I canít think of a better example of the behavior of the 50-day simple moving
average (SMA). Note from the chart in Figure 1 how it acts as a resistance level. The average is sloping down, and on May 9, 2005 and the following day,
prices hit that level and moved down. I have actually used this indicator for my long-term investments. When the value of the S&P 500 fell below the 50-day SMA,
I moved all my long-term investments into stable value funds. Although my returns werenít stellar, at least I can boast by saying that they didnít lose any money.