The message from today's chart is, "We're back in bull mode."
Longtime DailyWealth readers know we check in from time to time with the S&P 500's 200-day moving average to gauge which way the "tide" is flowing for the stock market. A moving average is an indicator that computes the average price of an index over a given time period… In this case, it's the blue line overlaid on the chart below.
There's nothing magical about the 200-day moving average. It's simply the most widely used "marking point" traders use to say if a market is in a bull trend or a bear trend. It's popular because it's popular.
As you can see from today's chart, the S&P spent much of 2009 and 2010 above the 200-day moving average. It then dipped below the average in May and has muddled along ever since. The big rally of the past few weeks, however, has taken the S&P above the average… and back into a bullish trend. Folks are taking Ben Bernanke at his word when he says he'll do anything to support asset prices.
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