The Capital Finance
This latter point is important for investors, as opposed to market traders who thrive on getting in and out of the markets to turn a profit quickly. On 9 March the S&P 500 closed at a recent low of 676. As of writing it is around 830, an increase of some 154 points or over 22%. But is this a much-feared bear market rally or the start of a genuine bull run? Let\´s see what the charts tell us.
A Simple Indicator for Investors
In contrast to the above definitions for a bull and bear market, the best and simplest indicator of the long-term market trend is the 200-day moving average (or 200-DMA). This is a simple average of the previous 200 trading days so covers data from over 40 weeks. The 200-DMA for the S&P 500 is currently at 1,019, some 200 points above the index itself and a strong indicator that, as we all know, we are in a deep bear market. The last time this 200-DMA resistance level was tested was back in May 2008 and it has been seriously downhill since then. A genuine and long-lasting bull market will only happen once this 200-DMA has been breached and the stock market index sits comfortably above it. Using this measure, we are not yet ready to call a new bull market.
