Joined Nov 11, 2007
1,458 Blog Posts

S&P 500 Closed Beneath the 50 Day Average. Should You Be Worried?

The 50 day moving average is an important demarcation, but a few closes beneath it are nothing to be concerned about.

The Rules:

Buy SPY at the close if

  • it has traded < 10 day beneath the 50 day simple moving average

Sell the trade at the close X days later.

No commissions or slippage included. All SPY history used.

The Results:

As the chart shows, there is nothing much to be worried about if SPY trades beneath the 50 day for a few days or even a couple of weeks.

The buy-n-hold results are calculated by chopping all SPY history into 50 day segments and then averaging those segments.



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  1. 4fl3x

    Very interesting, nice work Wood. Must be some real strong bounces to make up for the losers. Also points out the importance of a stop loss.

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    • Woodshedder

      Thanks. Some time spent above or below these major moving averages is usually not a sign of a huge rally or catastrophe. The main point is that there has been an upward bias throughout history, so when in doubt, it is usually correct to stay long.

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