Off the Charts
The market suffered its worst loss of the year today, with the S&P 500 (SPY) closing below its 8-day moving average for the first time in 2013. After the index closed at new move highs Friday, today's action represents somewhat of a "bull trap." Today was the first time of the year that there was a gap-and-go to the downside with no dip buyers in sight. The Nasdaq was hit the hardest, falling 1.51%, followed by the S&P, which shed 1.15%, and the Dow, which dropped 0.93%.
In Thursday's newsletter we stated that we were at a tricky spot in the market. We were off to a very strong start to the year, but there were some faulty technical signals starting to add up. The small-cap Russell 2000 ETF (IWM) and iShares Dow Jones Transportation Average (IYT), which had helped lead the market higher most of this year, were showing slight negative divergences, and then the S&P closed at its 8-day moving average for the first time. We didn't get immediate downside based on those bearish indicators, but today we saw the market finally give way....894 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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