After a couple of attempts at the 200-day moving average (in June), this time the SPX made a bold statement. Today’s massive close down clearly broke through this common point of support, as well as taking out the recent lows from June. Not to mention, that’s a heckuva big red bar.
From a pure probability perspective, so many red bars together – seven in a row - would call for a bounce in the short term. I would guess we will see it tomorrow or the next day. But beyond that, “Look out below”!
The markets seem to finally be responding to our country’s dismal economic conditions. With the debt ceiling crisis side-stepped we might expect a rally. This massive sell-off in the face of that news tells me that investors are aware of the ugly big picture. Hold on to your britches.
Good Trading…
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