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Home / Business / A looming death cross for the S&P 500 highlights a stock market in tatters

A looming death cross for the S&P 500 highlights a stock market in tatters



The S & P 500 is set to enter the ranks of the market benchmarks forming the dreadful Wall Street framework: the cross of death.

Read: Downward mortal crosses keep popping up, this time in retail and technology titles

A cross of death is brewing in the S & P 500

SPX, -1.23%

with the 50-day moving average at 2,763.56, on the edge of the slip below the 200-day moving average of 2,762.08, according to FactSet data.

A death cross is what the chart observers refer to as the point at which 50 days ̵

1; a short-term trend tracker – crosses under 200 days, which is used to define the long-term trend. Many believe that the cross marks the point where a shorter-term decline will graduate into a long-term downtrend.

Read: As a looming S & P 500 crossover could drive off the Santa rally of the stock market

Given the S & P On Thursday morning, the 500 fell by 2%, collapsing in tandem with the Dow Jones Industrial Average

DJIA, -1.59%

and the Nasdaq Composite

COMP, -0.31%

– a violation of the short-term trend line of the large-cap index under 200 days seems likely to take over as early as Friday.

If this is the case, it will mark the first time that the 50-day MA has fallen below 200 days for the S & P 500 since March 22, 2016, according to Dow Jones Market Data.

The benchmark move comes in a series of bearish models that have grown in stock and bond markets, highlighting growing concerns over the duration of an upward stroke of securities that lasted about a decade since even the vital signs of the economy have been strong, in a long run running if measured rebound from the 2007-09 financial crisis.

Thursday's slump – after the bond and equity markets were closed during a day of mourning after the death of the 41st president of the United States, George H.W. Bush – has been attributed to further signs that an agreement between the United States and China may not be resolved soon, even after a posting has been described as being forged over the weekend in the margins of the G-20 summit in Argentina, offering investors a reason to be happy.

The Canadian authorities have arrested the chief financial officer of Huawei Technologies Co., according to reports from the United States, fueling fears of another escalation in tensions between the two largest economies in the world, with officials Chinese people calling for the release of Meng Wanzhou, arrested on December 1.

A number of strategists pointed out that a recent series of deadly crosses appear on the market – a death cross formed in the Russell 2000 small-cap index

RUT, -1.32%

last month – can be used as a tool for those seeking to return to besieged property.

"As I mentioned in the previous article on the death of the cross that is Nasdaq Composite, the appearance of this infrequent omen does not necessarily mean the end of the world." In fact, it occurred in the S & P 500 four times since the start of the market cycle started in March 2009, "wrote Nathan Edwards, financial planner and wealth manager at IMG Management, in a recent blog.

But as MarketWatch's Tomi Kilgore writes, the disturbing education is also a sign of how equity markets crumbled in recent weeks. More than half of the 11 sectors of the S & P 500 index saw the death cross, and part of the index components are in bear markets, after having fallen by at least 20% from a recent peak. Both the S & P 500 and the Nasdaq are in correction, usually defined as a 10% drop from a peak.

With those unsightly technical developments at stake, crude oil futures

CLF9, -3.61%

collapsed and bond yields, which attract investments in security, are rapidly falling. The 10-year Treasury note

TMUBMUSD10Y, -1.32%

sold 2.85% at the last check, down from 2.92% on Tuesday. Bond prices increase with falling yields.

In addition, a narrowing differential between the reference 10-year Treasury and the 2-year Treasury note

TMUBMUSD02Y, -2.88%

known as yield curve, is flattening and threatens to reverse, a feature of the fixed income market that has foreshadowed every recession since 1975.

Read now : A brief painful squeeze beats bond market bears amid a sharp fall in yields

On their face, developments in bonds and oil suggest investors are questioning the lasting health of the global economy in years to come.

See: O futures in decline as OPEC delays output decision

Of course, this could be a perfect opportunity for long-term investors, but, at the moment, it might even seem that not everything is right with this bull market. Or, like Michael Antonelli, equity equity trader at R.W. Baird & Co., told the Wall Street Journal on Thursday: "Everything seems out of control right now."

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