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There is no guarantee that markets are headed for a crash just because this trend was broken. Investors need to be careful about blindly following any indicator that gets them out of the market. The whole trick to investing is: ‘How do I keep from losing everything?’ If you use the 200-day moving average rule, then you get out. As the legendary hedge fund manager Paul Tudor Jones said: Traders and investors pay close attention to this key technical level as a market timing signal to get out of stocks before the onset of a large downturn. On April 2, the S&P 500 Index closed below its 200-day moving average for the first time in almost two years, and has been bouncing around that level ever since. This piece I wrote for Bloomberg looks at the 200-day moving average, a favorite tool for many trend-followers. If you would like to use this type of strategy you have to be very thoughtful about implementation and understand the limitations involved. There’s much more nuance involved than simply looking at the moving average of the price of a stock or index. There are a lot of misconceptions out there about what the typical trend-following signals actually mean. It’s something my views have evolved on over the years. Trend-following is a strategy that got a lot of attention following the financial crisis. What The 200 Day Moving Average Does & Does Not Tell You