Chart of the Day: 50-DMA Break

Mar 27, 2017

If the S&P 500 closes below ~2,333 today, it will be the first time in 93 trading days that the index closed below its 50-day moving average.  Given that price above or below the 50-DMA is seen as a line of demarcation for whether an index is in a short-term up- or down-trend, a close below the 50-DMA will have technicians switching to a more bearish tune.

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The current streak of 93 trading days above the 50-day is the longest since a 130-trading day stretch that ended in March 2011.  Over the last 20 years, this is only the fifth time the index has had a streak of more than 4 months (roughly 88 trading days) above its 50-day, and it’s only the 11th streak of more than 4 months over the last 50 years.

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So how has the market historically done when it has broken below its 50-day after trading above it for a long stretch of time like it has just done?  We just sent today’s Chart of the Day to Bespoke research subscribers with an answer to this question.  The results may surprise you.  If you’re not yet a subscriber, you can see the report by starting a 14-day no-obligation free trial below.  Please log-in here if you’re already a member.

Chart of the Day: Overbought Streak Poised to End

Mar 21, 2017

With the S&P 500 giving up earlier gains and trading lower on the day, the index is poised to close at non-overbought levels (>1 standard deviation above its 50-DMA) for the first time since 2/2.  For reference, any close below 2,371.42 would move the index into neutral from overbought territory.

At a streak of 31 trading days overbought, this is the seventh longest streak of overbought closes in the current bull market and the eighth streak of 30 or more trading days. In today’s Chart of the Day (available to all paid clients), we took a closer look at prior streaks during the current bull market where the S&P 500 ended streaks of 30 or more trading days above its 50-DMA to see what patterns played out regarding its performance going forward.  Sign up for a free-trial below to check it out!

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