The secret no one tells you about the moving averages

Moving averages are one thing we always look at when looking at support & resistance. However there is a secret in which no one talks about.

Let's take a look at the weekly chart of the S&P 500.

Weekly chart S&P 500

The chart above is the weekly chart since 2010. I like to layer my charts with moving averages of time periods 50, 100, 150, and 200. So in this case the averages are 50 weekly moving average, and so on.

One clear thing about the moving averages is during a correction phase, or like last year's bear market of 2022, the support was found at the 200 weekly moving average. Every time the S&P 500 bounced off the 200 weekly moving average, had a good few years upwards move, except for the 2020 covid crash which dipped below the 200 weekly moving average. 

What if you were sitting on the sidelines and missed out?

Let me share a recent trend that the market has been sneakily doing. Now we look at the daily chart, and add the daily 20 exponential moving average.

Every time the market enters a shallow correction phase, the support is found at the 20 daily exponential moving average. In fact in between May & June, the S&P 500 was flirting with the 20 daily EMA, and at times it found support at the daily 50 moving average.

Hence if you were sitting on the sidelines because there was lots of bad news like "The Fed is not done hiking" or "The recession is coming", now you should focus on the technicals and buy on a shallow retracement.

Personally, the buying for me is done as I feel that the upside is limited and I would just let it run and compound on its own.

The window of opportunity to get in before $5.3 trillion of money that has been on the sidelines in money market funds, and before that comes back into the equity markets, you wouldn't want to miss out before the next big upmove. 

Money market funds are at its highest level 

@TigerStars 

@CaptainTiger 

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