I often use the 50-day mov­ing aver­age as an indi­ca­tor of the sec­ondary trend of a stock mar­ket, and the 200-day mov­ing aver­age as an indi­ca­tor of the key pri­mary trend. Specif­i­cally, one would like to see a stock mar­ket index trad­ing above both these mea­sure, but impor­tantly above the longer-term 200-day line.

I have ana­lyzed the mov­ing aver­ages of the prin­ci­pal asset classes using yesterday’s clos­ing lev­els. The fol­low­ing are a few key observations:

1. The U.S. stock mar­ket indices and Brazil are above both the 50– and 200-day mov­ing aver­ages. (In the case of the Dow (DJI 12482.07 ↑0.00%) Jones Indus­trial Aver­age and the South African All Share Index, the 50-day aver­ages are also above the 200-day fig­ures, rep­re­sent­ing a bull­ish sig­nal called a golden cross.)

2. China is below both their 50– and 200-day lines.

3. India and Rus­sia are above the 50-day aver­ages, but below the longer term 200-day averages.

4. The euro is below both averages.

5. The oil price, U.S. dol­lar and U.S. gov­ern­ment bonds are above both the 50– and 200-day lines.

6. The CRB Index (com­modi­ties) has just crept back above its 50-day aver­age, but is still below the key 200-day average.

7. Gold last week breached its 200-day line to the upside, but still trades below the 50-day line.

In sum­mary, the safe havens like gov­ern­ment bonds and the U.S. dol­lar still have fairly solid tech­ni­cal pic­tures, but are start­ing to look stretched. In the mean­time, more and more risky assets are start­ing to show promise as seen from the con­struc­tive action of a num­ber of stock mar­kets and some commodities.

Dr. Prieur du Plessis is an investment professional with 26 years' experience in investment research and portfolio management. More than 1,200 of his articles on investment-related topics have been published in various regular newspaper, journal and Internet columns, including his blog, Investment Postcards from Cape Town. He has also published a book, Financial Basics: Investment. Prieur is Chairman and principal shareholder of South African-based Plexus Asset Management, which he founded in 1995. The group conducts investment management, investment consulting, private equity and real estate activities in South Africa and a number of foreign countries. He also serves as Honorary Consul of Slovenia for South Africa, actively developing economic, cultural and scientific relations between Slovenia and South Africa. Prieur is 54 years old and live with his wife, television producer and presenter Isabel Verwey, and two children in Cape Town, South Africa. His leisure activities include long-distance running, traveling, reading, motor-cycling and scripophily. Read more from the author/contributor here.

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