The moving average, known as a lagging indicator because it focuses on past prices to identify a trend, is showing an upward trajectory. In particular, the 200-day moving average, represented in the purple line in the graph below, shows that the Dow is moving above the average despite all the gloom and doom in the latest market news.
A closer look at the S&P 500 below also shows that is currently above its moving average as well, but worry could ensue if it does break below the moving average. According to Jeff Tomasulo, Vespula Capital Founder and CEO, “To me, if we get a close below the 20-week moving average, the likelihood that we go test those lows are higher than it would be.”
In the meantime, unless technical indicators like the moving average warrant concern in the markets, it’s best to muffle the geopolitical noise.
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