This page was published on the old Macroption blog on 19 August 2013 and may be outdated.
On Friday S&P500 closed below its 50-day simple moving average for the first time since 3 July.
While the classical signal emerging from this situation would be to go short, in an uptrend like this more people will probably be looking at going long, betting on S&P500 to “reject” or “kiss” the moving average and resume the uptrend.
Below you can see how this simple strategy would have worked in the past.
Not as consistently bullish as one would think, especially during the first few days.