To taper or not to taper? That is the fork in the path but maybe the divergence in outcomes is smaller than expected – a pothole rather than a cliff. The S&P 500 is a more accurate measure of the U.S. market after three components of the Dow index changed this week. The weekly chart of the S&P 500 index shows a particularly strong and established trend with a number of important features.
First we look at trend strength. This is shown with the Guppy Multiple Moving Average (GMMA) indicator on the weekly chart. The long-term GMMA group of averages (shown in red) is well separated, which shows that investors are confident. When the index retreats investors enter the market as active buyers.
The short-term GMMA group of averages (shown in blue) is also well separated. When the S&P index moves to touch the wooer edge of the short-term GMMA it has been a buying opportunity to enter the market at a point of temporary weakness.