Chart Spotlight

So with the unknowns highlighted above, what hints can we look for in the current market that relate to previous markets and their outcomes? Instead of talking about what we think the current dynamics mean to the market as above, let’s focus on how the current market is behaving. Below are the charts of two significant domestic indices, the predominantly large cap S&P 500 and the smaller cap oriented Russell 2000. Both indices experienced a correction in the spring of this year that took them below their 50 day moving average, but not their 200 day MA. These MA indicators are what many market watchers consider support and resistance zones. As you can see the correction the past few weeks has been more severe, especially for the Russell almost 13% compared to an 8¼% decline for the S&P 500 . The 200 day MA for the S&P 500 has mostly held and if the 1425 level, just below last weeks lows, can hold I would consider the Bulls to still be in control. If that level fails look for the Bears to be smiling.

 

Final Thought

“My doctor gave me six months to live, but when I couldn’t pay the bill he gave me six months more” – Walter Matthau