A) Set up a spreadsheet to calculate the 26-week moving average of the index.

Note: In order to create the 26-week moving average for the S&P 500, convert the weekly returns to weekly index values using a base of 100 for the week prior to the first week of the data set. 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). Then, graph the resulting S&P 500 values and the 26-week moving average, beginning with the 26th week of the data set. Use Excel's Chart Wizard and save the chart to a new page.

Week of	S&P 500 Index	S&P 500 Return	S&P 500 Index Value	Moving Average
4/29/05	0.41
4/22/05	0.83
4/15/05	-3.27
4/8/05	0.71
4/1/05	0.13
3/24/05	-1.53
3/18/05	-0.87
3/11/05	-1.80
3/4/05	0.89
2/25/05	0.81
2/18/05	-0.31
2/11/05	0.19
2/4/05	2.70
1/28/05	0.30
1/21/05	-1.41
1/14/05	-0.14
1/7/05	-2.12
12/31/04	0.15
12/23/04	1.33
12/17/04	0.52
12/10/04	-0.27
12/3/04	0.72

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?

Date of Cross-through	Direction of S&P 500 in subsequent week

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?

Date of Cross-through	Direction of S&P 500 in subsequent week

D) How well does the moving average rule perform in identifying buy or sell opportunities?