As streaks go, the S&P 500 is in the midst of a pretty impressive one: 300 consecutive trading days closing above its 200-day moving average. The last time it fell below the popular technical indicator was on June 28, 2016, days after Britain voted to leave the European Union (EU). Over that post-Brexit two-day period, the S&P 500 fell 112 points, trading to 1991 as concerns around the growing protectionist movement had equity investors heading to the doors. However, what ensued was a sharp reversal as the now ten-year bull run in U.S. equities resumed. "Since then, the S&P has closed above its 200-day moving average for 301 consecutive trading days," Bespoke Research said in a recent note.

"This means the stock market has been in a steady uptrend with no significant blips for a LONG time."

Courtesy: Bespoke Research

The current streak is the 15th longest since the inception of the S&P in 1923, then known as the Composite Index (the index was extended to 500 stocks in 1957) but is a long way shy of the all-time record of 627 days that ended in May of 1956. However, as the S&P 500 continues to make record highs, the streak looks far from over. "Given that the S&P is currently more than 4% above its 200-day, this streak could go on for quite a while longer," Bespoke Research said.

Courtesy: Bespoke Research

For the current streak to break the 1956 record, it would have to hold above the level until Christmas of 2019. (See also: 7 Technical Indicators to Build a Trading Toolkit.)

Truth Or Fallacy

As formulas go, the 200-day moving average is fairly simple. You take the average of a security's closing price over the last 200 days.

[(Day 1 + Day 2 + Day 3 + ... + Day 199 + Day 200)/200]

Is this important, and what does it tell market participants? It depends on who you ask. Technical traders will argue it's significant, pointing to average returns when using a buy and hold strategy when a security trades through the level. On the contrary, skeptics say that most strategies around the 200-day moving average will return less than the average market return, and with thousands of stocks, indices, currencies, bonds, and commodities to trade, the chance of choosing a loser is high.

A further argument is that the level is a self-fulfilling prophecy, and the reason people watch the level is because ... people watch it. (Further reading: Is technical analysis a self-fulfilling prophecy?)

For those that use the 200-day moving average, it will act as one of two things. First, as a stop-loss level where a trader would exit their position if the security trades below or above the level. On the other hand, momentum traders will buy a security if it trades through its 200-day moving average with the belief that it will begin a prolonged trend (probably down).

The Takeaway

The 200-day moving average is more of a yardstick than an indicator. Whether or not it provides a reliable signal to traders is debated. Regardless, a streak of 301 days and counting is impressive either way you look at it.

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