This article will explore and backtest different moving average combinations on the S&P 500 SPDR over the last twenty years. Most moving average strategies work great when SPY trends, regardless of the period settings. However, SPY (aka, the market) does not always trend and trends are not uniform. Some are short and fast, while others are long and steady. This means we need moving averages that can best adapt to different environments.
Dividends may seem like harmless add-ons when it comes to price data, but they can have big effects over time. The biggest problem is that dividend adjustments create artificial prices that do not reflect reality at the time of the actual trade. There are also short-term problems as moving average values, price highs and price lows also shift after an adjustment.