The simple moving average can be a basic indicator for technical analysis when investing in exchange traded funds (ETFs).  We use the 200-day moving average as an indicator when to buy and sell ETFs for our clients.  Michael J. Bommarito II of ETF Central looks at the relationship between the moving average and its predictive power, using the S&P 500 SPDR (SPY) as an example.  You might have to read it a couple times to get the gist of the article, but it emphasizes the importance of trend following.

Bommarito concludes his study noting the strategy is similar to premium strategies that bond and mutual fund traders use.  As the market continues to reach new highs, it’s worth reviewing your strategy for investing with ETFs.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.