Many analysts consider a stock moving above its 200-DMA to be a buy signal. Furthermore, it is also said that a bull market can be defined as one where major market averages are trending up above their 200-DMA.
Through most of this bear market, we haven't seen many stocks or ETFs anywhere close to their 200-DMA. Now, that seems to be changing.
In my highly unscientific sample, I'm seeing a number of sector ETFs as well as the NASDAQ 100 have moved above their 200-DMA recently. Included among the ETFs I am tracking are the following:
- Technology iShares (IYW)
- Network iShares (IGN)
- Semiconductor iShares (IGW)
- Consumer Discretionary iShares (IYC)
In addition, the NASDAQ Composite is a hair away from crossing over its 200-DMA and the Telecom iShares (IYZ), though it didn't quite hold on after crossing above its 200-DMA today, seems ready to make the move soon. Materials (IYM) and Industrials ETFs (IYJ) are also only a few points away their 200-DMA.
Looking farther afield, the iShares FTSE/Xinhua China ETF (FXI) crossed above and now seems to be consolidating at a level above its 200-DMA.
Other major market averages such as the Russell 2000 are only a few points away from their 200-DMA. Will they be rejected or will they power through and confirm something stronger than a bear market rally is underway?
I'm not much at making those kinds of predictions but I am becoming more encouraged with the fact that we now have some leadership that might be able to pull this market upward.
Disclosure: small position in IGN