I analyze macroeconomic issues from a fundamental perspective, and I analyze market behavior from a technical perspective. Original macroeconomic analysis can be found here and both macro analysis and commentary can be found on my Caps blog. If you like or appreciate my analysis, please add yourself to my Following List

Tuesday, August 24, 2010

Moving Average Examination

Just a quick look at the First Derivative (rate of change of price) of the 200 day MA. We can all see that it is flattening out. The actual rate of change is now zero (at least very close to it) and looks quite likely that it will turn negative. A down trending 200 day MA will be another confirmation that a top is most likely in.*

* Note: Simply because the 200 day MA turns negative, doesn't guarantee anything. It could be essentially flat for years if it wanted to (e.g. a trading range). But given all the macro developments, possibilities of a double-dip (or even just a single scoop, per Rosenberg), institutional investors will likely look at a down turn in the 200 day MA as a very ominous sign.
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