Here is my story for SFO Magazine this week:
Friday, November 11, 2011
By J.C. Parets
Who needs Pacquiao vs. Marquez when you have the stock market vs. its 200-day moving average? You may think I’m joking, but this is all business.
Saturday’s upcoming fight is going to be a cake walk for Pacquiao and should be over rather quickly. However, the S&P 500 and Dow Jones Industrial Average can only dream about it being as easy for them.
Two weeks ago, both the S&P 500 and Dow Industrials tried to break through their 200-day averages. After a day or two of battle, both indexes quickly reversed and rolled over. Round 1 went to the 200-day. Earlier this week, both indexes tried once again to break above that key moving average and got knocked down one more time. Round 2 also went to the 200-day.
But stocks aren’t giving up without a fight. Today, both averages are up big trying once again to break through the all important 200-day moving average. And I think there is a strong potential here for a breakout.
IMPORTANCE OF MOVING AVERAGE
Why is this moving average so important? Why do we care so much about whether or not stocks are above or below it? This little red line is a measure of the average daily close for each particular index over the last 200 days (or 40 weeks).
Tags: $DJIA $SPY $QQQ