Here's an excerpt from 21st Century's moring briefing. He likes the 40 week over the 200 day. One would think that since 40 weeks is 200 days (trading days) they would be the same, but I guess the day wiggles make a difference as opposed to the weekly wiggles.
Plus the bulls still have a few things to pin their hopes on. There's a really nice uptrend line off the bottom that has yet to be breached. And the SPX recently closed over the 200 day moving average, which is a measurement that I don't think is very useful, but excites many nonetheless.
Unfortunately for the bullish case, the SPX moved right back down and closed just under this 200 day average yesterday. To me, the more important barometer of the market's underlying price health is the 40-week exponential moving average, which is the pink line on the weekly chart below. Once again, price has rejected a move above this level.
A convincing close above this level -- that holds -- would be a different story for the markets. Then we may have to entertain the notion that "this time it really is different", and the market can actually put in a significant rally with sentiment already at bullish extremes. But at this point, that's just a daydream.
In the longer-term view, you can see how this 40-week exponential moving average has kept a lid on every bear market rally. So far, this time is definitely not different.
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