Moving averages – indicating bull or bear markets?

 EmailPrint This Post Print This Post

The table below provides a summary of the 50- and 200-day moving averages pertaining to a number of global indices. The orange shading indicates indices still trading below their moving averages and show the percentage gain required in order to reach the moving average line. Conversely, the green shading shows those indices that have already breached the moving averages to the upside and the numbers indicate the percentage decline that will reverse the break.

Click on the table below for a larger image.

16-april-m3.jpg

The 50-day moving average is an indicator of the secondary trend and has been breached by all the markets on the list with the exception of Copenhagen. However, the longer-term 200-day moving average is of more importance as an indicator of the primary trend. Although it is a lagging indicator by construction, it fulfils a useful role to keep investors on the right side of the long-term trend.

It is important to note that the three conditions must be met in order to flash new equity bull markets, namely (1) the index in question must penetrate the 200-day average, (2) the 50-day average must cross the 200-day line, and (3) the 200-day average must turn upwards.

The current situation is one where a number of emerging markets – China, India, Brazil, Venezuela, Taiwan, South Korea and Chile – have to a greater or lesser extent crossed their respective 200-day moving averages. In the case of China, the 50-day line has also broken the 200-day line.

Studying chart patterns of the various global bourses leads one to conclude that in the case of a number of emerging markets base formations have possibly been completed and that the cycle lows may very well be in. However, as far as mature markets are concerned, the picture remains inconclusive until primary trend indicators turn positive.

 

Did you enjoy this post? If so, click here to subscribe to updates to Investment Postcards from Cape Town by e-mail.

 

OverSeas Radio Network

4 comments to Moving averages – indicating bull or bear markets?

  • Great table. I have a watchlist of stocks from various sectors and there are several above the 50MA and a very few that are above the 200MA. Regardless, most all are in a sideways (concolidating) phase wherein the moving averages, instead of trending, are going sideways. None are above both as you indicate is needed for an equity bull market. Nimble trading is my strategy. Take what the market is willing to give.

  • Thank you for the helpful post – I think it generally confirms that we are somewhere in no-man’s land (at least in the developed markets), trying to establish a trend. Personally, it’s hard to see the underlying economic fundamentals driving the markets much higher. The mortage market will take a second hit beginning this summer with option arm and alt-a resets set to rise, and the employment situation is still grim.

  • BJ

    This table contain good comparative information. However, One thing that should be considered is the number of tries made to take 200ma. After a serious down trend (50% drop in most indices). An initial 32% or 50% retracement to the upside is possible. What matter is the energy ( price /volume) and internal strength of such a more.
    Otherwise we are set for the next major down move, just when an index claims its 200d ma.

  • Gleb

    Great table, gives a real perspective!
    Thank you!

Leave a Reply

  

  

  

You can use these HTML tags

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Top 100 Financial Blogs

Recent Posts

Charts & Indexes

Gold Price (US$)

Don Coxe’s Weekly Webcast

Podcast – Dow Jones


One minute - every hour - weekdays
(requires Windows Media Player)
newsflashr network
National Debt Clock

Feed the Bull