Moving Averages May Tame SP 500 Decline

By: Chris Ciovacco | Fri, Nov 26, 2010
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With the information we currently have in hand, we would expect any corrective activity in stocks to look more like 2009 than 2010. The rally off the March 2009 lows followed a very significant correction (a bear market). The current rally has followed two significant corrections in 2010 (Jan-Feb and Apr-July). If this hypothesis plays out in the real world, it is helpful to know what a "typical" correction looked like in 2009.

2009 Shown Below:

Moving Averages May Stem Stock Declines

If the 40, 50, and 75-day moving averages remain important during any corrections in Q4 2010, current market weakness could subside near 1,182, 1,173, or 1,144.

2010 Shown Below:

S&P 500 Moving Average Support

 


 

Chris Ciovacco

Author: Chris Ciovacco

Chris Ciovacco
Ciovacco Capital Management

Chris Ciovacco

Chris Ciovacco is the Chief Investment Officer for Ciovacco Capital Management, LLC. More on the web at www.ciovaccocapital.com.

All material presented herein is believed to be reliable but we cannot attest to its accuracy. Investment recommendations may change and readers are urged to check with their investment counselors and tax advisors before making any investment decisions. Opinions expressed in these reports may change without prior notice. This memorandum is based on information available to the public. No representation is made that it is accurate or complete. This memorandum is not an offer to buy or sell or a solicitation of an offer to buy or sell the securities mentioned. The investments discussed or recommended in this report may be unsuitable for investors depending on their specific investment objectives and financial position. Past performance is not necessarily a guide to future performance. The price or value of the investments to which this report relates, either directly or indirectly, may fall or rise against the interest of investors. All prices and yields contained in this report are subject to change without notice. This information is based on hypothetical assumptions and is intended for illustrative purposes only. THERE ARE NO WARRANTIES, EXPRESSED OR IMPLIED, AS TO ACCURACY, COMPLETENESS, OR RESULTS OBTAINED FROM ANY INFORMATION CONTAINED IN THIS ARTICLE.

Ciovacco Capital Management, LLC is an independent money management firm based in Atlanta, Georgia. CCM helps individual investors and businesses, large & small; achieve improved investment results via research and globally diversified investment portfolios. Since we are a fee-based firm, our only objective is to help you protect and grow your assets. Our long-term, theme-oriented, buy-and-hold approach allows for portfolio rebalancing from time to time to adjust to new opportunities or changing market conditions.

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