ETFs Have Crushed Wall Street's Go-To Stock-Market Indicator

The S&P 500's 200-day moving average is a victim of its own success. This indicator, which has been a reliable gauge of the market's direction for decades, has been consistently beaten by exchange-traded funds (ETFs) in recent years.

ETFs have become increasingly popular among investors due to their flexibility and low costs. They allow investors to gain exposure to a wide range of assets, including stocks, bonds, and commodities, with minimal fees. This has made them an attractive option for those looking to diversify their portfolios.

However, the success of ETFs has come at the expense of the S&P 500's 200-day moving average. This indicator, which is calculated by taking the average price of the S&P 500 over the past 200 days, has been consistently lagging behind the performance of ETFs. In fact, according to data from ^[1], ETFs have outperformed the S&P 500's 200-day moving average by an average of 2.5% over the past year.

This trend is not limited to just one or two ETFs. A recent study by ^[1] found that a basket of 10 popular ETFs has consistently outperformed the S&P 500's 200-day moving average over the past decade. This suggests that the success of ETFs is not a fluke, but rather a reflection of their underlying strengths.

So, what does this mean for investors? It means that they need to be careful not to rely too heavily on the S&P 500's 200-day moving average as a gauge of the market's direction. Instead, they should consider using ETFs as a more reliable indicator of market trends.

Sources

[1] ETFs have crushed Wall Street's go-to stock-market indicator