200-Day Moving Average Muffles Market Noise

A historic peace meeting between U.S. President Donald Trump and North Korean leader Kim Jong-un coupled with a positive economic outlook that caused the Federal Reserve to raise interest rates last week was trounced by escalating trade tensions between the U.S. and China–all news sending markets on a volatility roller coaster ride that could now have the Dow Jones Industrial Average end in the red for the seventh straight day.

Related: Trade Wars Drag Dow Down 200 Points at Open

It’s easy for investors to get caught in the crosshairs of geopolitical news, causing them to sell off investments in a frenzied environment. However, when looking at a moving average, a technical indicator that aims to smooth out the price of an investment by filtering out the market noise from volatility, it reveals that the Dow is not in as much turmoil as the news purports.