The 17/43 Weekly Exponential Moving Averages

The chart below shows the S&P 500 index, SPX, from 2003 through early 2010 and its associated 17/43 weekly exponential moving averages (EMA). Several analysts at Standard & Poor’s back tested 30 years of stock market data and found that the 17/43 EMA did a good job of keeping investors in the market during UP-trending periods, and triggered investors to move to the sidelines during bear markets. A bullish trigger is when the 17 week EMA crosses above the 43 week EMA, and a bearish trigger is when the 17 week EMA crosses below the 43 week EMA. Note how the 17 week EMA stayed above the 43 week EMA from mid 2003 through January 2008 keeping investors in the market during the 5 years of an up-trending market. Moreover, note how it warned investors to get out of the market in January 2008, which happened to be the exact start of the ’08/’09 recession.