S&P 500 Teeters on the Brink of the Dreaded “Death Cross”
Yesterday’s close on the S&P of 1030 was negative on two fronts. First, it was a break of the very important technical level of 1040 which has served as a bottom several times this year. This break below has given the bears an addition leg to stand on and press their short interests. Second, the continued decline of the S&P 500 has moved the 50-day moving average to 1118 – very close to bearishly crossing below the 200-day moving average which now stands at 1112. This cross, dubbed the “death cross” by market technicians, is view by many in the fundamental analysis community as astrology. That said, the last such cross was in December 2007 – before one of the greatest market declines since the 1930s. Tomorrow’s non-farm employment report will go a long way toward either proving that the bears have it right, or if traders have become too bearish and a rally is long overdue. In either case, watch these important technical indicators for signs of where the market may be headed.