I have a view on the subject of moving averages. Not everyone will agree with it but I am OK with that.
Let me explain.
I entered the securities business in 1973 after graduating with a BA degree from the University of Connecticut. In 1972, I helped one of my finance professors edit his book Security Analysis and Portfolio Management, which included a chapter on technical analysis. In the book there was a brief mention of the 200-day moving average line referring to the work by Joseph E. Granville in the 1960's.
The 200-day moving average line is close to the number of trading days in a calendar year and it has a long history of being used by equity technicians. Futures traders have a shorter time horizon because of the leverage in those markets but they also began to use the 200-day moving average after 1982 when stock index futures began to trade.
In 1977, I was working as a futures broker and called on the purchasing department of Unilever (UL) . The company purchased large quantities of soybean oil for margarine and salad dressing. They had a large chart of soybean oil on their office wall with a four-month moving average line.
I was new to the business and asked why a four-month moving average when futures traders used things like the 4-9-18-day moving averages or the 10- and 20-day averages. Their answer was simple and meaningful -- four months was the shelf life of margarine.
My lesson from this: moving averages should make some fundamental sense. A 12-month moving average on housing starts or some other monthly economic data. A 65-day moving average line because it is a quarter. Or a 15-month moving average line on cattle prices.
On CNBC this Monday morning a noted strategist from Morgan Stanley (MS) talked about the S&P 500 and the 200-week moving average line. I am totally perplexed on how this time frame relates to anything. Sorry.