Posted
Jun 05 2009, 05:59 PM
by
Charley Blaine
Not finishing in the black for 2009 on Friday was probably a disappointment for many fervent watchers of the Dow Jones Industrial Average ($INDU).
But they can take solace in this signal: The index did finish above its 200-day moving average for the first time since May 19, 2008 -- nearly 13 months ago.
Why should you care? How a stock or an index trades against a moving average is a measure of investor confidence. When the stock or index moves off a low and climbs above a moving average is a strong signal of returning confidence.
The 200-day moving average is very closely watched. Why? I offer Nicholas Lewarne's note in a recent post on the Naked Hedge Fund blog as simple explanation. "The 200 Day MA is the Great Wall that separates Bull market from Bear market."
Bull market: That's a word few people have dared utter for months. Maybe it's worth learning how to say it again.
The fact is, the Dow is the last of the three major indexes to cross its 200-day moving average. The Standard & Poor's 500 Index ($INX) crossed the threshold May 28 and is now trading a bit more than 2% more than its 200-day average. The Nasdaq Composite Index ($COMPX) moved above its 200-day moving average on May 26 and is now trading nearly 10% above the average
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