The 40-month and 200-week moving averages
The press and media often quote the 200-day ma and 50-day moving averages, and many traders and investors act on their buy and sell signals.
Based on the concept of the self-fulling prophecy, if enough investors use the same technical indicators, they can influence the direction of the index or market.
Death cross-sells signals across market indexes via crossing the 50-day ma below the 200-day ma has confirmed the Jan 2022-present cyclical bear declines.
However, the longer-term moving averages indicators, the 40-month and 200-week moving averages remain in structural uptrends.
It is reasonable to expect these are more reliable trend indicators than the intermediate-to-shorter term moving averages, at least based on structural trend analysis.
The less popular 40-month monthly moving average indicator may be one of the best trend indicators for longer-term trends, including structural (i.e., 8 – 20 years) and generational trends (35 – 42 years). The 200-week moving average is an equally reliable indicator for long-term directional trends.
They are not too fast to produce many false signals and not too slow to miss the pivotal long-term buy and sell signals.
Since the 1920s, the 40-mo ma and the 200-week ma have been reliable moving average indicators that have successfully called all structural bull and bear trends in the SPX Index (SPX).
Concrete violations of the 40-mo ma and 200-wk ma, and most importantly, the rolling over (downtrend) of the moving averages warn of the start of structural bear/trading range markets (i.e., 1966-1982 and 2000-2013, etc.).
Successful tests of the 40-month and 200-wk moving averages have also led to the resumption of the structural bull markets (i.e., 1982-2000 and 2013-present).
During the Feb-Mar 2020 pandemic-induced cyclical bear decline, SPX slightly breached the two long-term moving averages but managed to turn above these moving averages in Apr 2020, reaffirming the resumption of the May 2013 structural bull.
The Nov 2021 (NASDAQ, Tech, and growth)/Jan 2022 (Listed, value, and others) cyclical bear declines near inflection points, corresponding to the two longer-term moving averages.
Will a successful test again trigger the resumption of the 2013 structural bull?
Or will a convincing break of the two moving averages, followed by the rolling over of the trends, warn of a structural bear?
For further information, refer to the enclosed monthly and weekly charts of the SPX Index (SPX).