S&P 500 Major Support Broken

Flop around in a flat market long enough and your moving averages begin to lineup pretty perfectly.

And then one day you break below them both at once – and lose the same support level you lost to trigger the August correction.

I’m using SPY instead of the index here:

spy

 

The people who need to have a reason for this will blame:

  1. Oil
  2. Tax loss selling
  3. Santa is running late
  4. The ECB
  5. Rate Hike next week
  6. whatever

To me, the reason is probably less important than just having the awareness that short-term traders act differently above and below these support levels. Trigger fingers get itchier, liquidity becomes more in-demand and story stocks lose their appeal.

Investors should orient their expectations and mindsets accordingly.

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