After a bruising week, the global financial system now stands at a crossroads.
Global stock markets were hammered last week and for May as negative fundamental factors and ugly technical indicators rattled investors around the world. As we enter June, significant events approach that put the entire global financial system at an historic crossroads.
On My Wall Street Radar
chart courtesy of StockCharts.com
The S&P 500 (NYSEARCA:SPY) has now declined 9.9% from recent highs and is on the edge of official “correction” territory which begins at 10%. For the week, the S&P 500 (NYSEARCA:SPY) shed 3% and for May it declined 6.3%.
Other major indexes suffered the same fate with the Dow Jones Industrial Average (NYSEARCA:DIA) dropping 2.7% for the week, 6.2% for May and now is negative for the year. The Nasdaq Composite (NYSEARCA:QQQ) joined in the decline, down 7.2% for May while the Russell 2000 (NYSEARCA:IWM) led the way south with a decline of 10% for the month just ended.
A look at the chart above shows us that the S&P 500 (NYSEARCA:SPY) has broken below its 200 day moving average as of Friday’s close.
More ominously, all four major U.S. stock market indexes, the Dow Jones Industrial Average (NYSEARCA:DIA) S&P 500 (NYSEARCA:SPY) Nasdaq Composite (NYSEARCA:QQQ) and Russell 2000 (NYSEARCA:IWM) are now all below their respective 200 day moving averages, the widely watched level that is often considered the demarcation line between bull and bear markets.