Crazy Flux
  • Business
  • World
  • Stocks
  • Investing
  • Business
  • World
  • Stocks
  • Investing

Crazy Flux

Stocks

SPY and QQQ Recapture their 200-day SMAs – Tips for Reducing Whipsaws and Improving Performance

by admin May 17, 2025
May 17, 2025
SPY and QQQ Recapture their 200-day SMAs – Tips for Reducing Whipsaws and Improving Performance

SPY and QQQ crossed above their 200-day SMAs with big moves on Monday, and held above these long-term moving averages the entire week. The V-Reversal was extraordinary and SPY seems short-term overbought, but this cross above the 200 day SMA cross is a bullish signal for the most important market benchmark. Despite a bullish signal, long-term moving averages are trend-following indicators and it is important to set realistic expectations.

***** This is an abbreviated version of a research report covering the 200-day SMA, performance improvements and a twist for QQQ. Recent reports at TrendInvestorPro covered the V-Reversal, the Bottoming Process and an Exit Strategy for the Zweight Breadth Thrust. Click here to take a trial and get immediate access. *****

The chart below shows SPY with the 200-day SMA (blue). This 200-day cross captured two big uptrends since 2020 and foreshadowed the bear market in 2022. Even though these three signals look great, there were plenty of whipsaws along the way. SPY crossed the 200-day SMA 141 times since 2005, which averages 7 crosses per year. Averages can be deceptive because some years have more crosses than others. SPY did not cross its 200-day in 2021 and 2024, but there were 22 crosses between January 2022 and March 2023.

The indicator window shows Percent above MA (1,200,1) to better highlight these crosses. It turns positive (green) with a bullish cross and negative (red) with a bearish cross. The values are the percentage difference between the close and the 200-day SMA.  

There is no such thing as a perfect indicator. Trend-following indicators are great at catching big trends, but they are also prone to whipsaws (failed signals). Whipsaws are simply the price of admission for a trend-following strategy. We must take the good (big trends) with the bad (whipsaws). As the chart above confirms, trend-following works over time because one good trend pays for the whipsaws.

Chartists can improve 200-day SMA signals with a little smoothing. For example, use a 5-day SMA instead of the close. Since 2005, the 5-day SMA crossed its 200-day SMA 55 times, which averages out to 3 per year. Fewer signals means fewer whipsaws. Also note that this smoothing generated higher returns and lower drawdowns.

The chart above shows the SPY with Percent above MA (5,200,1). This indicator captures the percentage difference between the 5 and 200 day SMAs. Instead of 22 crosses between January 2022 and March 2023, the 5-day SMA crossed the 200-day SMA just 8 times. This indicator is part of the TIP Indicator Edge Plugin for StockCharts ACP.

We can reduce whipsaws even more by adding a signal filter. This next section will cover signal filters and performance metrics for SPY. We then show how other ETFs perform and add little twist to improve performance for QQQ signals. This section continues for subscribers to TrendInvestorPro. Click here to take a trial and get immediate access. 

////////////////////////////////////////

previous post
Rio Silver Receives Conditional Approval for Acquisition of Mamaniña Exploraciones S.A.C.
next post
The S&P 500 Snapped Back Hard: Now What?

Related Posts

Emerging Stocks to Watch – Breakouts, Momentum &...

May 19, 2025

BSX Stock Slump? Discover This Winning Option Strategy

April 3, 2025

Stock Market Volatility: Pain Points, Bright Spots, and...

April 11, 2025

Three Growth Stocks Testing the Ultimate Trend Barometer

March 28, 2025

Where the Market Goes Next: Key Resistance Levels...

May 11, 2025

Mastering Stock Market Turbulence: Essential Insights for Investors

April 10, 2025

Breakouts, Momentum & Moving Averages: 10 Must-See Stock...

June 3, 2025

Transform Your Investing Strategy: Uncover the 3 Game-Changing...

March 11, 2025

Market Chaos: How to Spot Bottoming Stocks Before...

February 14, 2025

The Best Five Sectors, #14

April 6, 2025

    Join our mailing list to get access to special deals, promotions, and insider information. Your exclusive benefits await! Enjoy personalized recommendations, first dibs on sales, and members-only content that makes you feel like a true VIP. Sign up now and start saving!


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent

    • China-appointed Panchen Lama vows to make religion more Chinese in meeting with Xi Jinping

      June 7, 2025
    • Israel confirms it is arming Hamas rivals in operation opposition calls ‘complete madness’

      June 7, 2025
    • How the US could be vulnerable to the same kind of drone swarm attack Ukraine unleashed on Russia’s bomber fleet

      June 7, 2025
    • Video of man carrying suspicious bundle after his employee’s death fuels femicide outrage in Mexico

      June 7, 2025
    • Carney invites Modi to G7 summit despite strained ties between Canada and India

      June 7, 2025
    • Kharkiv hit by ‘most powerful attack’ of entire war, mayor says, as Russia pounds Ukraine again

      June 7, 2025
    • About us
    • Contacts
    • Privacy Policy
    • Terms and Conditions
    • Email Whitelisting

    Disclaimer: crazyflux.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.


    Copyright © 2025 crazyflux.com | All Rights Reserved