«The Fate of $4,000 will be Telling.»
Traders,
Moving averages are gathering grounds for buyers and sellers. As such, they often mark key tests for a trend. For instance, the S&P 500 rally was finally snuffed out at the falling 200-day moving average two weeks ago. It didn’t have to be that way, but bears proved too powerful and decided to make a stand finally.
With the selling that has since ensued, prices have retreated to the 50-day moving average, which currently sits at the psychologically significant round number of 4,000. Heading into the test, prices are down nearly 8% in a straight line and arguably oversold.
If we don’t see any fight from buyers here, it will be another vital signal that bulls have indeed given up and the daily downtrend is here to stay.
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$SPX is testing the 50-day in early-morning trading Tuesday. A failure here doesn’t bode well.
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