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Do S&P 500 Moving Averages Signal Trend Change in H2 2018?

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S&P 500 Index moving averages

Moving averages are important technical indicators that can help investors identify short-term changes in market trends. These indicators are known as lagging indicators, as they are calculated on the basis of past prices.

The broader market S&P 500 Index (SPY) and the tech-heavy NASDAQ Composite Index (QQQ) managed to provide positive returns in the first half of 2018 despite huge uncertainty in the global trade environment. The rising trade tension has affected the overall performance of the US equity market so far this year.

On July 2, the S&P 500 Index was trading 1.8% below its 50-day moving average, on par with its 100-day moving average, and 1.3% above its 200-day moving average. On May 29, its 50-day moving average crossed its 100-day moving average in an upward direction.

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When the short-term moving average crosses the long-term moving average in an upward direction, it indicates a bullish trend. When it crosses it in a downward direction, it indicates a bearish trend. The technical indicators are suggesting that the short-term trend of the S&P 500 Index could be bullish. If the bullish trend continues, then we might see some more upside in the second half of 2018.

In the next part of this series, we’ll analyze what the technical indicators are suggesting for the S&P 500 Index.

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