S&P Tests and Moves Below the 100-Day MA

01/07/2015 9:00 am EST

Focus: FOREX

Greg Michalowski

Chief Currency Analyst, FXDD

Greg Michalowski, of ForexLive.com, demonstrates how the S&P index—which continued to move lower on Tuesday—is being tested and he highlights how a second dip below the 100-day MA in less than a month is a worry and worthy of a cause for pause.

The S&P (SPX) index continued the move lower in trading on Tuesday.

Weaker US data is not a help. Also, in a Bloomberg article, Janus’ Bill Gross said:

“With global expansion still sputtering after years of interest rates near zero, investors will gradually seek alternatives to risky assets.”

He added:

“When the year is done, there will be minus signs in front of returns for many asset classes.”

chart
S&P taking a peak below the 100-Day MA at 2003.68
Click to Enlarge

Technically,

  • The S&P price held topside trend line last week. Sellers leaned against the level. Bearish.
  • The price fell below the 50-day MA Monday at 2040.61 currently (bearish), and is now
  • Moving below the 100-day MA at the 2003.68 level (see blue line in the chart above).

In mid December, the price fell below the 100-day MA before the Fed meeting buy rallied up with a strong Christmas rally. A second dip below the 100-day MA in less than a month is a worry and worthy of a cause for pause.   Has the stock run their course?

The 200-day MA is at the 1960.09 level. A move to this level would be a 6.35% decline from the top. That certainly is within the realm of possibilities.  A 10% decline targets 1884.

The S&P is currently trading at 1998.57 as selling intensifies.

By Greg Michalowski of ForexLive.com

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