Closing Below 50-Day Moving Average, S&P 500 Shows Warning Signal
The $S&P 500 Index (.SPX.US)$ closed below its 50-day moving average for the first time since March on Tuesday, ending its longest streak since September 2020, with 96 consecutive days of closing above the 50-day moving average, a closely watched momentum gauge.
Momentum indicators such as the 50-day and 200-day moving averages have served as dependable indicators for market performance since the start of 2022. In 2022, the S&P 500 consistently experienced sell-offs shortly after touching or surpassing its 200-day moving average.
The decline in U.S. stocks has been ongoing since the end of July, and analysts attribute this to a combination of fundamental and technical factors, including an increase in long-term Treasury yields, which has led to a decrease in stock valuations, and a stronger US dollar.
The $U.S. 10-Year Treasury Notes Yield (US10Y.BD)$ rose to 4.27% on Tuesday, the highest level in about 10 months.
What are analysts saying?
There's probably some longevity to this corrective phase, but maybe weeks, not months," Katie Stockton, the founder of Fairlead Strategies, said during a phone interview Tuesday.
We've got a lot of room to fall. But the long-term trend is still solid," said John Kosar, chief market strategist at Asbury Research, during a phone interview.
Hopefully, we'll get rid of some of the bubble in the market and make for a nice buying opportunity in the fourth quarter," Kosar said.
Source: Market Watch
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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