The Bears have made a significant move, pushing the S&P 500 below the key level of 5,667, which is the highs from July 2024.
Here’s the chart:
Let's break down what the chart shows:
The black candlesticks in the top panel is the S&P 500 index price.
The green and red line in the bottom panel is the Momentum Regime (Daily RSI).
In a bullish regime, the RSI often exceeds 70 during rallies and finds support around 35-40 during corrections. In a bearish regime, it drops below 30 during sell-offs and doesn't reach overbought levels in counter-trend rallies.
The Takeaway: Over the past few months, I've been sharing my bull market checklist, emphasizing the importance of the 5,667 level in the S&P 500 for the bullish trend. However, after yesterday's trading, the bears have pushed the S&P 500 below this key level.
Not only was this price level breached, but the S&P 500 also fell below its 200-day moving average, and the momentum shifted to a bearish regime...
Global breadth continues to expand, particularly within Developed Markets, as 81% of the 22 developed markets I track are now above their 200-day moving average.
Here’s the chart:
Let's break down what the chart shows:
The blue line in the top panel shows the price of the developed markets index.
The black line in the lower panel shows the percentage of developed markets above their 200-day moving average.
The Takeaway: At present, 81% of developed markets are trading above their 200-day moving average, the highest level we have seen this year. This is particularly significant given the ongoing selling pressure in the S&P 500, which has just recorded its third consecutive week of declines.
US investors have benefited from their tendency to favor domestic markets over the past decade. However, this trend could be on the verge of changing, with the relative strength of US markets diminishing while Europe and other developed markets are beginning to take the lead. This might be the moment...
The blue line in the top panel is the S&P 500 index price.
The gray bars in the second panel are the number of days prior to the start of a 5% correction.
The yellow bars in the third panel are the number of days prior to the start of a 10% correction.
The red bars in the fourth panel are the number of days prior to the start of a 20% correction.
The Takeaway: As of yesterday, the S&P 500 has pulled back 6.6%. It took 142 trading days for the S&P 500 to experience a 5% correction, which last occurred in August 2024.
So, what’s next? A 10% correction would bring the S&P 500 down to 5,529. It has been 337 trading days since we last witnessed a 10% correction. This level would essentially return the S&P 500 to where it was at the time of the last 5% correction.
Next is the possibility of a 20% correction, which would bring the S...
