SPY: 1000 day ema, the value investors friend.The sp500 has touched and held many times at the 1000 day exponential moving average, and it coincides with the average 15-16 price to earnings ratio of the sp500.
While the 200 day moving average is more widely followed, the 1000 day is significant once the 200 day is breached. The 1000 day is also known as the 200 week moving average.
For value investors, the charts alone dont give the full story. And using moving averages alone is not enough to fully judge value. But I have found that using the 1000 day ema as a quick test has helped find many fantastic buying opportunities, after doing further homework of course.
I am not recommending shorts or saying we will sell off hard. I do say that If it was at the 1000 ema, I would be more interest in going long and with more conviction. What we are seeing now is closer to the beginning of market taking profits than to a significant entry point.
As shown, the sp500 Earnings yield is very wimpy, in the 3% range. No wonder Warren Buffett at Berkshire keeps raising cash. We would be wise to track Earnings yields and wait for better opportunities, which should correlate with the 1000 day ema, in my opinion.
