Systematic Trader’s and Market Timing traders may use the 200 day Simple Moving Average as their trading plan. The 200 day moving average is basic technical analysis. It is a good market timing trading plan for active trading in indexes and ETF’s that have trend following characteristics. It can produce disastrous results if used for every stock index, ETF, or stock.
Other widely followed moving averages are the 100 day moving average and the 50 day moving average. Some money managers will use these moving averages with a shorter moving average and use the cross of the shorter moving average above or below the longer moving average to generate trading signals. The goal of two moving averages and even 3 moving averages is to eliminate whipsaws that often occur with moving averages as a technical analysis indicator.
Why should you care about the signals produced with the 200 day moving average? There are so many people using the 200 day moving average, that we will often see extreme volatility in indexes when they cross both above and below the 200 day moving average.
The below chart shows the current 200 day simple moving average condition on the 50 most actively traded ETF’s.
On Friday January 29, 2010, the EWH ETF for Hong Kong gave a 200 day “Sell Signals joining the FXI ETF for China and the USO ETF for Oil. The UUP ETF for the U.S. Dollar is still below the 200 Day SMA, but above the 50 Day SMA.
You need to pay attention to these signals. They may reverse, but many other shorter term moving average systems are now on a “Short” Watch in coming days for more “Sell Signals”
| Security Name | Trend3 | Ticker |
| Barclays High Yield Bond | Stay Long | JNK |
| BRIC IShares | Stay Long | BKF |
| Coal Power Shares | Stay Long | PKOL |
| DB Commodity Index | Stay Long | DBC |
| Diamond Trust DOW | Stay Long | DIA |
| Energy Select SPDR | Stay Long | XLE |
| Internet Holders | Stay Long | HHH |
| IPath India Index | Stay Long | INP |
| IShare Russell 2000 | Stay Long | IWM |
| IShares 25 Index | Stay Short | FXI |
| IShares Australia | Stay Long | EWA |
| IShares Basic Materials | Stay Long | IYM |
| IShares DJ Real Estate | Stay Long | IYR |
| Ishares DJ Transportation | Stay Long | IYT |
| Ishares Emerging Markets | Stay Long | EEM |
| IShares Financial Sector | Stay Long | IYF |
| IShares Germany | Stay Long | EWG |
| IShares Hong Kong | New Short | EWH |
| IShares Latin America | Stay Long | ILF |
| IShares Mexico | Stay Long | EWW |
| IShares Mid Cap 400 | Stay Long | IJH |
| IShares MSCI EAFE | Stay Long | EFA |
| IShares MSCI Japan | Stay Long | EWJ |
| IShares Pacific ex Japan | Stay Long | EPP |
| IShares S&P 500 Growth | Stay Long | IVW |
| Ishares S&P Small Cap 600 | Stay Long | IJR |
| IShares Silver | Stay Long | SLV |
| IShares South Africa | Stay Long | EZA |
| IShares South Korea | Stay Long | EWY |
| IShares Taiwan | Stay Long | EWT |
| IShares United Kingdom | Stay Long | EWU |
| NDX 100 | Stay Long | QQQQ |
| Oil Service Holders | Stay Long | OIH |
| Pharmaceutical Holders | Stay Long | PPH |
| PowerShares US Dollar Index | Stay Short | UUP |
| Russia | Stay Long | RSX |
| RYDEX S&P 500 Equal Weight | Stay Long | RSP |
| S&P 500 | Stay Long | SPY |
| Semiconductor Holders | Stay Long | SMH |
| SPDR Consumer Descretionary | Stay Long | XLY |
| SPDR Consumer Staples | Stay Long | XLP |
| SPDR Gold Shares | Stay Long | GLD |
| SPDR Healthcare | Stay Long | XLV |
| SPDR Industrial Sector | Stay Long | XLI |
| SPDR International Real Estate | Stay Long | RWX |
| SPDR Materials | Stay Long | XLB |
| SPDR Metal & Mining | Stay Long | XME |
| SPDR Mid Cap | Stay Long | MDY |
| SPDR S&P Homebuilders | Stay Long | XHB |
| SPDR Technology | Stay Long | XLK |
| Steel Market Vector | Stay Long | SLX |
| US Oil | Stay Short | USO |
| Wisdom Tree Total Dividend | Stay Long | DTD |
You should not trade any systematic trading plan without proper back testing and analysis of the trading characteristics of the index, stock or ETF you are trading.
These trading signals are provided courtesy of the website you are viewing this information should not be used without research and advice from a financial professional.
Be aware that this condition can and will change any day in the future.
We monitor the 200 day moving average daily along with a number of other systematic trading plans.
There is No “Holy Grail” in trading systems. Do not use the 200 day SMA or any other systematic trading system without proper research on the asset.
For questions on rule based, systematic trading, contact
mark@seleznovcapitaladvisors.com
www.seleznovcapitaladvisors.com
