May 2025 Moving Averages

As a calming influence, here’s the latest about moving averages. The S&P 500 closed May with a monthly gain of 6.2%, the largest since November 2023.   However, Morningstar published an article today “Has the Stock Market Reached Peak Optimism on Tariffs? – Strategists say equities have already priced in the good news on tariffs as the trade war grinds on.” I’ll periodically post if I become aware of changes of merit.

• As of today (June 3, 2025), SPX index 200-day simple moving average is 5787.75, with the most recent change of +2.51 (+0.04%) on June 2, 2025.
• Over the past year, SPX index 200-day SMA has increased by +1009.50 (+21.13%).
• SPX index 200-day SMA is now at all-time high.

SMAs (Simple Moving Averages) for Vanguard’s Total Stock Market Index ETF, Vanguard FTSE All World Ex-US ETF and the iShares 7-10 year Treasury Bond ETF each indicate that one should be invested at this time.

Recently, the 10- and 12-month simple moving averages for the S&P indicated “cash” but after three months this shifted to “be invested”.  I don’t use these as sell indicators because I see the moving averages as one of several barometers for investor sentiment.  They make it easier for me to comprehend some of the positions taken at the HD and other forums.

I’m not making any kind of recommendation.  As usual this is “Caveat Emptor”. Readers should be aware that I don’t jump in and out of the markets and I keep busy with other things so as to avoid the daily noise.

I suggest we each consider our investing approach and tolerances. I’m a “buy and hold” investor of ETFs and individual stocks.  I judge the merit of individual stocks by the products and management of the companies involved.  I usually sell a portion if a stock exceeds an arbitrary upper percentage limit in my portfolio, or if something changes at the company.  In other words, I seldom sell anything and in the past 18 months I added to my equity positions and using the DRIP approach added stock using dividends.  I occasionally buy on the dip.  I’m retired so I only buy if I have free cash or sell something. I’ve been holding cash to avoid a sale in a down market. With cash yielding 4% or more, it is an attractive option to me, but does not replace stocks because of my inflation concerns.

One may have noticed that recent upheavals have been sharp. Using averages isn’t predictive. It is somewhat like driving by looking in the rear view mirror, or walking out the door and then noticing that “it is raining”.

Why use simple moving averages? Proponents say that a strategy which uses 10- or 12-month simple moving averages (SMA) would have ensured participation in most of the upside price movement since 1995 while reducing losses.  But don’t expect to exit at the top or enter at the market bottom.

There are a number of websites that publish moving averages and SMA charts for different indexes.  The interested should do a search. However, I cannot vouch for the accuracy and that is something to keep in mind.