200 Day Moving Average

UUP DAILY

SPY DAILY

I thought I would point out some observations regarding 200 day moving averages. Of especial interest to me is what happens when price makes a first test of the 200 day, after putting in a bottom.
First lets look at SPY when it first tested its 200 day after bottoming in March 09. Notice how price broke through then moved down testing and finding support at the 200 day. During this time the 200 day was down sloping. Along the way price stayed above the downward sloping 200 day, allowing the 200 day to start its up sloping angle, signalling a trend change. If looking at charts making their bottoms during this time frame you can see how constant the pattern is.
I believe the same is true when price breaks down through the 200 day, it will break through and stay below for a few days, weeks. Then a thorough retest of the 200 day should occur and if the trend has changed then price should really never have multiple closes above the 200 day.
Currently the major indices are above their 200 day moving averages, but if they break this is what I will be watching.
However there are sectors, stocks where this is occurring now. One of the sectors is mining, so I think we will have a resolution as to whether the gold up trend is broke in a matter of weeks. On the other hand the dollar index has broke through its down sloping 200 day, so I will be watching for the subsequent testing of the 200 day which will occur for further clues regarding dollar strength and commodity weakness. Together this analysis should allow me to be on the right side of the market. If the dollar index holds it subsequent tests of its 200d and the miners can not get above their 200 days, well then it will be time to abandon the miners for me. As they are not a core holding for me. They are not something I like to hold for years.
Here are some other important indices,sectors below their 200 day worth monitoring, FEZ, any miners, banks.
Lastly, I do not think this market correction will be over until every important sector has tested its 200 day, so be patient on the long side for entry's and hold on to your shorts if they have not yet hit their 200 days, thats my plan and has been working. I am only long the miners because I am willing to pay to play to see if the dollar index has enough buying interest to change its trend and I tend to think not, but I am not married to that thesis and will jump ship if the above happens.

For the dollar index I substituted UUP and the yellow line on the charts is the 200 day.