# Trend: the S&P 500 against its 10-month moving average

> Why a price below its 10-month moving average is treated as a warning, what the research says, and how often the signal changes.

Updated 2026-10-17 · https://anacleto-zb7h.onrender.com/guides/trend-moving-average

The **trend** thermometer compares the S&P 500 with the average of its last **ten months** of prices
(price / average − 1). Above the average the trend is up; below it, prices have fallen enough to break the trend.

## How Anacleto reads it

- below **0%** (the index under its moving average): red;
- above: neutral. The trend never turns green: being above the average is the normal state of a rising market, not
  a reason to add risk.

## Why a trend signal

Valuation thermometers (CAPE, risk premium) can stay red for years while markets keep rising. Trend-following rules
of this kind, studied among others by Faber (2007) and by Neely, Rapach, Tu and Zhou (2014), react instead to what
prices are doing now, and historically have cut part of the deepest falls.

## Limits

In sideways markets the index crosses its average back and forth, and each crossing changes the signal: a rule that
followed it mechanically would trade often and sometimes at the wrong moment. Anacleto only shows the signal; what to
do with it is up to your [rules](https://anacleto-zb7h.onrender.com/guides/rules-engine).