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By most technical definitions, a major market moment just happened: the S&P 500 reclaimed its 200-day moving average (200DMA). Traders and investors often interpret this move as a bullish signal — but like many signals, context is everything.
In this article, we’ll cover:
What the 200DMA is and why it matters
What typically happens after the S&P 500 reclaims it
Whether the May 2025 reclaim qualifies as a "good reclaim"
What traders should watch for next
🧭 What Is the 200-Day Moving Average?
The 200-day moving average (200DMA) is the average closing price of a stock index over the past 200 trading days (about 10 months). It’s widely used to identify long-term trends:
Above the 200DMA → bullish trend, increasing investor optimism
Below the 200DMA → bearish trend, concern about the market's direction
It acts as a kind of technical dividing line between long-term uptrends and downtrends (Murphy, Technical Analysis, 1999).
🔁 What Does It Mean to "Reclaim" the 200DMA?
A reclaim occurs when the S&P 500, after trading below its 200DMA, crosses back above it. This often signals a potential trend reversal or renewed market strength. However, not all reclaims are created equal.
📊 What Has Happened Historically After 200DMA Reclaims?
Here’s what the historical data shows:
(Sources: Ned Davis Research, Bespoke Investment Group, Strategas Research Partners, 1950–2023)
Reclaims are most reliable when they are:
Accompanied by strong market breadth (i.e., many stocks also moving above their 200DMA)
Confirmed with high volume
Followed by multiple closes above the 200DMA
📌 May 2025: Is This a “Good Reclaim”?
As of May 23, 2025, the S&P 500 has crossed back above its 200DMA, currently sitting at ~5773, with a closing price of 5802.82. Looking at the chart above, several key bullish elements are in place:
The 20-day and 50-day moving averages are sloping upward, supporting short-term momentum
The MACD (Moving Average Convergence Divergence) remains in bullish territory, with the signal line trending upward
RSI (Relative Strength Index) is above 50 (currently 56.1), signaling positive momentum
Moreover, market breadth is improving: over 50% of S&P 500 stocks are now trading above their 200DMA (Bespoke, May 2025). Volume has been moderate but steady, and the reclaim is holding for more than a day — all signs of a potentially strong reclaim.
However, macro headwinds remain:
Volatility (VIX) has edged higher due to renewed trade tensions, following policy comments by former President Trump suggesting new tariffs (Investor’s Business Daily, May 23, 2025).
Investor sentiment remains cautious, and recent pullbacks highlight the market’s sensitivity to geopolitical and policy shifts.
Conclusion: While not a perfect setup, this reclaim has many characteristics of a “good reclaim” — breadth, momentum, and moving average alignment — but requires ongoing confirmation. A few more closes above the 200DMA with broad participation would likely convert this from a hopeful rally to a confirmed trend reversal.
🧠 Key Terms Explained
S&P 500: A stock index representing 500 large U.S. companies
200DMA: 200-day moving average — used to assess long-term trend direction
Reclaim: When a price moves back above a key average it had fallen below
Breadth: % of stocks participating in a move; broad = healthy
VIX: Volatility Index — measures expected market turbulence
MACD: Indicator that tracks momentum via convergence/divergence of moving averages
RSI: Relative Strength Index — a momentum oscillator that identifies overbought/oversold levels
🧭 What to Watch Next
Closes Above the 200DMA: A sustained hold above the line
Breadth Expansion: Ideally 60–70% of stocks above their own 200DMA
Macro Stability: Signs of resolution or reduced noise on trade, inflation, and rates
Earnings Season: Continued strength from tech and consumer sectors could drive next leg
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