Similar move in 2003 signaled rally

	Bernie Schaeffer Schaeffer’s Investment Research Inc.
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The next test for the S&P 500 Index (SPX) is its 40-week moving average, in the 943 neighborhood. The 40-week is currently about 1.5% above Friday's close.

The 40-week moving average of the SPX does a pretty decent job of defining sustainable uptrends and downtrends – I note in particular the move above the 40-week in April 2003, which marked the end of the 2000-2003 bear market and was followed by a persistent 30% rally.

The SPX most recently fell below the 40-week trendline in December 2007, and this has not been retaken on a weekly closing basis since then.

Even more fascinating, the 2009 intraday high is also at 943, though it should be noted that the 40-week is declining rather steeply.

I'd suggest that a weekly close above the 40-week could be a highly significant affirmation that this market has further room to run.

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