The S&P 500 fell beneath the famous 200-day moving average.
Fans of “technical analysis” will worry that this represents “key support” for the market, and that because it is now below this line, the market is in for further trouble.
Photo: Bloomberg, Business Insider
A few astute commenters have pointed out that, as the chart clearly shows, the S&P 500 did briefly cross below the 200-day moving average in early June before rocketing higher.
Thus, the real signal for technical analysts is the confirmation of the trend – in other words, when stocks move back up to the moving average, will they cross through to the upside, or do they bounce back to the downside?
If it’s back to the downside, and the red line becomes a key “resistance” level instead of a key “support,” then it may mean bad news for stocks.
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