Northam,
this pertains to Bull market corrections:
During the Bull market that started late 2002, early 2003, every correction in SPY which closed below its 200dsma (as it will likely do today) also at least tagged the 320dsma sometime soon after. The first time this happened was in August, 2004 (SPY of 107). The market rose after that then very nearly (within pennies) tagged the 320dsma again in September, 2004 (SPY of 109). The next times were: April, 2005 (SPY of 115); October, 2005 (SPY of 117.50); June and July, 2006 (SPY of 124); then three more times in middle-through-late 2007 (SPY in middle-to-low 140s) which was the end of that Bull market.
The same process played out during the period from 1994 through most of 2000.
Dare I state the obvious, SPX is now significantly below its 200dsma and will likely close there today. Another obvious ... during Bear markets SPY does more than just tag SMA(320); it stays below, and it spends most of its time below both its SMA(200) and its SMA(50).
If SPY closes today below SMA(200), based on history it is a virtual certainty that price is headed for at least a tag of SMA(320) fairly soon. That would be near a SPY of 102.
Yet another very interesting point: for all cases between 1994 to present, the SMA(320) and the EMA(320) have had nearly identical values as price crossed between Bull and Bear. Those two averages are not anywhere near equal at this point in time. The difference is historically significant and is approximately 7 SPY points. That difference might have something to do with how far price was below those averages at the market bottom in March of 2009 and how fast price moved up thereafter.
