Don't look now… but we're darn close to bear market territory.
Twelve days ago, we ran a chart of the benchmark S&P 500 index plotted with its "200-day moving average." This indicator is a popular gauge of whether the market is in a bullish rally or a bearish decline. Back then, the S&P was well above this important "line in the sand." But the past week or so has produced a big change in this picture…
The S&P 500 ended yesterday near its closing price of May 7, the day of the famous "Flash Crash." This is incredible market weakness. As you can see from today's chart, it is weakness that has the index close to violating its 200-day moving average.
Lots of traders pay attention to "support levels" like the May 7 low and the 200-day moving average. A breach of these two levels at the same time will appear in a lot of headlines… and it will kick off a wave of stock dumping. Danger ahead.
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