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TPA Plus - Trend Range

RUSSELL 3000 50DMA CROSSES BELOW THE 200DMA (Mar 7, 2022, 7:37:37 AM)

Turning Point Analytics utilizes a time-tested, real-world strategy that optimizes the clients entry and exit points and adds alpha.   TPA defines each stock as Trend or Range to identify actionable inflection points.

In the short run, the market is a voting machine, but in the long run, it is a weighing machine.  – Benjamin Graham

WORLD SNAPSHOT COMMENTS & CHARTS     Monday, March 07, 2022

General comments first and macro tables at the bottom.  Links for Explanations of Technical terms at the bottom of the report.

RUSSELL 3000 50DMA CROSSES BELOW THE 200DMA

Although the S&P500 and the Nasdaq get most of the attention, it is the Russell 3000 Index that represents 98% of all publicly traded equity in the U.S. On Friday the Russell 3000 50DMA traded below the 200DMA for the first time since July of 2020. In general, stocks and markets are technically positive when the nearer-term moving averages trade higher than the longer-term moving averages. This makes intuitive sense, of course, because it connotes that prices are rising. Before clients search for the exit doors or their parachutes, it may be helpful to see what has happened historically when the Russell 3000 50DMA crosses below the 200DMA.

The table located under the chart below is derived from all data since the inception of the Russell 3000 on 12/31/86 (35 years). A 50DMA<200DMA cross has occurred 17 times in the past 35 years. TPA calculated the percent change in the Russell 3000 at 30, 90, 182, and 365 days after a 50DMA<200DMA cross. Normally, such a cross is not a negative signal for stocks. The Russell 3000 was -0.31%, +5.08%, +9.24%, and +18.65% on average 30, 90, 182, and 365 days after a 50DMA<200DMA cross. In fact, the Russell 3000 was positive 52.94%, 70.59%, 76.47%, and 82.35% of the time 30, 90, 182, and 365 days after a 50DMA<200DMA cross. The only significant negative markets after a Russell 3000 50DMA<200DMA cross was 2000 (TECH bubble) and 2008 (Housing crisis). 

The lower portion of the table shows that performance for all 35 years for the Russell 3000 is fairly in line with the 50DMA<200DMA cross data.

Of course, if the Russia-Ukraine situation broadens into a European War or worse, all bets are off. If, however, the current markets swoon is like 80% of similar incidents since 1986, this could present a buying opportunity.

RUSSELL 3000 50DMA < 200DMA

Chart, histogram

Description automatically generated

CLICK ON LINKS BELOW FOR TECHNICAL INDICATOR EXPLANATIONS:

ASCENDING – DESCENDING TRIANGLE

BASING-TOPPING-CONSOLIDATION

BREAKOUT (Breakdown)

CHANNEL & RANGE

DIRECTIONAL MOVEMENT INDEX (DMI)

DOUBLE BOTTOM or DOUBLE TOP

MACD-MOVING AVERAGE CONVERGENCE-DIVERGENCE

MOVING AVERAGES

RELATIVE STRENGTH & PEER STOCK PERFORMANCE

REPEATING PATTERNS

RSI-RELATIVE_STRENGTH

SUPPORT, RESISTANCE, BREAKOUT, BREAKDOWN

TREND

ALWAYS REMEMBER: No strategy exists in a vacuum always evaluate the relevant sector & market.

Over 80% of portfolio performance is determined by sector and market forces (Ibbotson & Kaplan study January/Febuary2000)

Turning Point Analytics Disclaimer

Turning Point Analytics (TPA) is only one of many tools that an investor should use to make a final investment decision.  TPA is an overlay on top of a clients good fundamental or macro analysis.  TPA does not create or provide fundamental analysis. The information in this communication may include technical analysis.  Technical analysis is a discipline that studies the past trading history of a security while trying to forecast future price action.  Technical analysis does not consider the underlying fundamentals of the security in question and it does not provide information reasonably sufficient upon which to base an investment decision.  Investors should not rely on technical analysis alone while making an investment decision.  Before making an investment decision, investors should consider reviewing all publicly available information regarding the security in question, including, but not limited to, the underlying fundamentals of the security and other information which is available in filings with the Securities and Exchange Commission.  The information and analysis contained in reports provided by TPA are copyrighted and may not be duplicated or redistributed for any reason without the express written consent of TPA. The information in this communication is for institutional or sophisticated investors only.  By accepting this communication, the recipient agrees not to forward, and/or copy the information to any other person, except as permitted, or required by law. TPA does not guarantee accuracy or completeness. TPA is a publisher of technical research and has no investment banking or advisory relationship with any company mentioned in any report.  Reports are neither a solicitation to buy nor an offer to sell securities. Past performance is in no way indicative of future results. Opinions expressed are subject to change without notice.  TPA will provide, upon request, the details of any past recommendations. TPAs analysis and recommendations should not be used as the sole reason to buy or sell any security. TPA may compensate brokers and intermediaries for sales and marketing services. You understand and acknowledge that there is a very high degree of risk involved in trading securities and/or currencies. The Company, the authors, the publisher, and all affiliates of Company assume no responsibility or liability for your trading and investment results.  It should not be assumed that the methods, techniques, or indicators presented will be profitable or that they will not result in losses. Statements, data, and analysis made by TPA or in its publications, are made as of the date stated and are subject to change without notice. TPA and/or its officers and employees may, from time to time acquire, hold, or sell a position in the securities mentioned herein. Upon request, TPA will furnish specific information in this regard. TPA will not be held liable for losses caused by conditions and/or events that are beyond TPAs control, including, but not limited to, war, strikes, natural disasters, new government restrictions, market fluctuations, and communications disruptions.

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