What it is
The 200-day moving average is the average closing price over the last 200 trading days, about ten months. It is the most common line for judging the long-term trend of a stock or index. See Simple moving average (SMA).
What the research shows
Gayed and Bilello's paper Leverage for the Long Run (2015) tested the S&P 500 back to 1928:
| S&P 500 was | Next-day returns, annualised | Volatility |
|---|---|---|
| Above its 200-day average | About +14% | About 15% |
| Below its 200-day average | About -2% | About 27% |
Markets below their 200-day line have historically been both weaker and much more volatile. That matters most for leveraged funds, which suffer most in volatile markets. See Volatility decay.
How it is used
- Trend filter: hold stocks, or leverage, only when the index is above its 200-day line; move to bonds or cash below it. See TQQQ For The Long Term (FTLT).
- Market health: the share of stocks above their own 200-day line is a Market breadth measure.
- Context for a single stock: a company far below its line has lost the market's confidence, for now.
Weaknesses
- Whipsaws: prices that hover around the line trigger repeated buying and selling.
- Lag: it confirms a new trend only after a large part of the move.
- Start-date bias: results depend heavily on the period tested; much of the benefit comes from avoiding 1929 to 1932 and 2008.
See also
- Simple moving average (SMA) What a simple moving average is, how to calculate it, the common 50-day and 200-day averages, and how investors use them to read a trend.
- Momentum investing What price momentum is, the evidence that recent winners tend to keep winning for a while, how momentum is measured, and its crash risk.
- TQQQ For The Long Term (FTLT) The TQQQ For The Long Term strategy explained: its 200-day regime filter, RSI branches, the research behind it, backtest claims and the risks it carries.
- Leveraged ETFs explained How leveraged ETFs like TQQQ and UPRO work, why they reset daily, how volatility decay erodes them, and what their historical drawdowns look like.
Pages that link here: Fundamental analysis, If-then signals, Market breadth, Reading a market overview, Volatility decay
Last updated September 30, 2026. Education only, not investment advice.