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“Magic” number heralds a decline in the US stock market

Schedule S&P 500 Index at intervals of 1 day. Source: Bloomberg

The S&P 500 is up 16% above its 200-day moving average, which is bad news for the bulls. In the past eight months, the US stock market has done this five times (on Friday – the sixth), and each time it was followed by a correction of varying degrees of depth.

All this makes the 16% number truly “magical”, writes Bloomberg analyst Kriti Gupta.

The strongest decline of more than 10% occurred in September and was driven by a correction in technology stocks. On the eve of this event, the FANG + index, which is led by shares of Facebook, Apple, Netflix Google, etc., rose above the 200-day MA by almost 40%.

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At the moment, this index exceeds its 200-day MA by only a little 20%, so the likely correction may not be as deep as in September, the expert concludes.

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