S&P 500 has finally broken below the 200 day moving average
For awhile now the Short Side of Long blog has been focusing on the fact that S&P 500 has not experienced at least a 10% correction in almost 4 years and that the US index has traded above its 200-day MA for the last 184 out of 188 weeks. Such a hot streak isn’t a record breaker by any means, but it did signal that buying pressure is becoming exhausted. In the last post, we wrote a summary of stock market contrarian signals, which under normal conditions should help the index rally at least for awhile.
We also stated that if negative sentiment, elevated credit spreads and oversold breadth doesn’t help the bulls by producing a rally, it will be a sign that trouble is directly ahead. It looks like we are finally getting some trouble in the US equity space, where the S&P 500 has finally broken below the 200-day moving average as well as its uptrend line from November 2012 (chart below). NYSE 52 week new lows continue to dominate new highs, as has been the case for several weeks already.
Worse stock market breadth since 2008 as new lows dominate new highs
