In case you missed Charlie B.’s excellent table from yesterday, which illustrates the S&P500 has not closed below its 200-day moving average in 526 days, here you go.
Stunning, especially given Joltin’ Joe’s hitting streak lasted 526 consecutive games. Coincidence? You decide.
We do have the S&P500 closing below its 200-day April 2, 2018, however. Not the case for the exponential 200-day versus the simple 200-day, but moving to the exponential opens up earlier days for such a breach. The same holds for the SPY, the S&P500 ETF. We have the question into Charlie.
Even so, the simple 200-day has been the steel curtain of support for the stock market over the past two years. The classic moving average took a massive pounding late March to early May yet still held, which we noted in our, Stock Bull & Bear Traps Galore post in early May,
Relentless Pounding Of The 200-day Moving Average
A lower swing high, that is below 2.717, will almost seal the fate the bears will take out the 200-day sometime very soon. They have been relentlessly pounding the 200-day during this correction.
In bull markets, the 200-day may be tested maybe once or twice over a short period then bounce big and continue the uptrend. Not test it every third day as it seems to be doing recently.
Some believe what doesn’t kill you makes you stronger.
Personal character? Absolutely.
Technical support levels? We don’t think so.
Eventually, the front line will crack, even if it is the robots defending it. And, what if they decide to all retreat at the same time and go offer only, as they did in the flash crash?
When contemplating the constant hammering of the S&P500’s 200-day moving average, think the financial equivalent of Chairman Mao’s “human wave theory.”
“overwhelm the defenders by the sheer weight of numbers” – Wikipedia
-Global Macro Monitor, May 7
We concluded wrongly. Thank you ‘bots, algos, machines, drones or whatever the hell you want to call them.
We do expect the 200-day to be breached sometime before the year-end, however, with a higher probability of it happening in August or September. In case you’re wondering, the current S&P simple 200-day is at 2698, or about 4 ½ percent below today’s close.
Stay tuned.
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