The economic recovery and ensuing bull market off the 2009 financial-crisis lows has been one of the longest in history.
And over that stretch of time, the S&P 500 index has reached technical milestones. While making new all-time highs, the index rallied past big round numbers like 2000 and 2500 and Fibonacci extension 161.8 before reaching its Fibonacci 261.8% level, based on the 2007 highs and 2009 lows.
In the process of reaching the 261.8 Fibonacci extension, the S&P 500 saw its momentum slow and the index broke its long-term uptrend line (1).
Over the past 18 months, the S&P 500 has carved out 3 peaks (of sorts). And, in doing so, momentum has produced a lower high at each (2).
The latest peak comes at a “kiss” of the underside of that long-term uptrend line. And the recent selloff has the S&P 500 breaking below its short-term rising uptrend line off the December 2018 lows. This isn’t a good look for the market.
Stock bulls do not want to see selling accelerate here; instead, they want to see a breakout above the 261% level! If the S&P breaks above the 261% level, it will send a STRONG bullish message to the market.