The SPDR S&P 500 ETF Trust (NYSE:SPY), which tracks the S&P 500, recently closed below its 200-day moving average. A market expert said this key indicator should not be ignored by investors and provided some recent examples of what happened the last few times this level was breached.

Bad Things Happen

Freedom Capital Markets Chief Market Strategist Jay Woods recently highlighted cracks forming in the markets and a chance for market indexes to fall below key levels.

On March 19, the SPDR S&P 500 ETF Trust closed below its 200-day moving average, a move that came after more than 200 days in a row above the key indicator.

"The S&P 500 finally breached this key technical and psychological level," Woods said in a recent newsletter.

Woods told readers that the old adage is that "bad things happen under the 200-day moving average," which he said is true as a trend follower. The market expert cautioned that it’s not always bad news, though, and sometimes the bad news applies more to individual stocks than market indexes.

"We noted that 20 of the last 28 times this happened after a 200+ day streak above it, price recaptures that average within 10 trading days. However the largest drawdown over that time was only 3%… we are currently -4.1% below the average. The likelihood we get that snapback seems less and less."

Recent Historical Drawdowns

Woods shared in his newsletter some recent history of the SPY breaking below the 200-day moving average and what happened next.

Here are some examples from the last 10 years:

  • 2018 into 2019: index fell -17.6% below 200-day moving average
  • March 2020: index fell -26.6% below 200-day moving average
  • June 2022: index fell -19.4% below 200-day moving average
  • October 2022: index fell -19.5% below 200-day moving average
  • April 2025: index fell -19.5% below 200-day moving average

Woods said that in all of these cases except for the bear market of 2022, the move below the 200-day moving average was "short lived" and investors got good entry points for the short and long term of the overall market.

"We just need to ask which scenario the current situation is most likely to resemble from a stock market point of view."

The market expert said now could be a good time to "put money to work" ahead of a snapback rally.

"Remember the biggest rallies in the market also happen under the 200-day moving average."

SPY Price Action

The SPDR S&P 500 ETF Trust traded at $631.97 Monday, versus a 52-week trading range of $481.81 to $697.84. The ETF is down 7.8% year-to-date in 2026, but remains up 12.7% over the last 52 weeks.

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