I started out this week, on the top ten video, recommending to watch the transportation index. I said that we were at a key resistance level, with the 200 day MA sitting right above it. Well, as you know, the market sold off this week and we failed to break above that level.
At this point I think we can still view the index to gather clues on future direction of the market. Currently, price is sitting right above the 50 day MA. I will be watching for a close below this level in the coming week to determine if my cash levels need to be raised.
Note: One thing we have going for the bulls is the infamous golden cross. Looking at the S&P 500, Woodshedder’s prediction may come true Monday with the 50 day MA moving above the 200 day MA. Take a look:
Note II: Have a good weekend traders, and Happy Father’s Day to all the Dads! Look for a classic iBC video this weekend.
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I think the airlines are coming to help the transports as well:
http://www.flickr.com/photos/anthonybrown/3640846195/sizes/o/
Disclosure: I’m long CAL, UAUA, JBLU calls.
Hey RC, is the 50ma crossing above the 200ma a bullish sign, is there any history to back it up?
I have been following this site for the last 3 months, you guys are the bomb with explosive calls, I banked some serious coin, just want to say thank you!!
Slick,
“A crossover involving a security’s short-term moving average breaking above its long-term moving average or resistance level is bullish. As long-term indicators carry more weight, the Golden Cross indicates a bull market on the horizon and is reinforced by high trading volumes. Additionally, the long-term moving average becomes the new support level in the rising market.”
good articles about golden crosses:
http://marketsci.wordpress.com/2008/09/21/moving-average-crossovers-debunked/
this one just came out today, on the subject of golden cross (great minds think alike, RC + MS)
http://marketsci.wordpress.com/2009/06/18/which-golden-cross-is-the-best-golden-cross/
Michael Stokes has an awesome blog, but his Golden Cross doesn’t include all the cool stats that mine does:
http://www.ibankcoin.com/woodshedderblog/index.php/2009/06/10/spx-golden-cross-coming-soon/
a golden cross is only truly golden if both moving averages are moving in the same direction … in this case the 200dma is still declining, while the 50 is rising … so it does not truly qualify … it would take months for the 200dma to turn up
Juice, nah. Through all the history of the SPX that I have (50 years), there have only been 25 instances of the Golden Cross. I can only imagine that the added requirement that you note would reduce number of opportunities to the point where there would be no point.
All that being said, Stokes says he is going to post the results of the cross with the added requirement of having both averages moving up.
um, is it so hard to simply look at previous instances of this ‘holy grail’ of technical indicators? “rolling on the floor laughing and looking for my swizzle-conduit simply because i dont wanna be labeled ‘lazy’, thanks.”