Log in to Connect and link to the material for Chapter 9, where you will find five years of weekly returns for the S&P 500.
a. Set up a spreadsheet to calculate the 26-week moving average of the index. Set the value of the index at the beginning of the sample period equal to 100. The index value in each week is then updated by multiplying the previous week's level by (1 + rate of return over previous week).
TABLE 9.4 Market advances and declines

b. Identify every instance in which the index crosses through its moving average from below. In how many of the weeks following a cross-through does the index increase? Decrease?
c. Identify every instance in which the index crosses through its moving average from above. In how many of the weeks following a cross-through does the index increase? Decrease?
d. How well does the moving-average rule perform in identifying buy or sell opportunities?

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Declines Advances Day Advances Declines Day 704 986 789 968 1095 970 1002 702 609 722 1 906 653 2 3. 721 503 497 903 850 748 4. 766 10 766 2.