{"id":76149,"date":"2023-10-24T06:12:40","date_gmt":"2023-10-24T10:12:40","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/the-sp-500-is-trying-to-hold-its-200-day-moving-average-what-happens-if-it-breaks\/"},"modified":"2023-10-24T06:12:44","modified_gmt":"2023-10-24T10:12:44","slug":"the-sp-500-is-trying-to-hold-its-200-day-moving-average-what-happens-if-it-breaks","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=76149","title":{"rendered":"The S&P 500 Is Trying to Hold Its 200-Day Moving Average. What Happens If It Breaks."},"content":{"rendered":"
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The
\n S&P 500
\n sank below a key level Friday\u2014one that would indicate more declines are a possibility. <\/p>\n

The S&P 500 has fallen about 8% from its intraday high for the year of 4607 hit in late July to about 4238 by late Monday morning. Earlier in the day, it traded as low as about 4190. There, it had broken below its 200-day moving average\u2014about 42350\u2014for the first time since March of this year.\u00a0<\/p>\n

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What\u2019s driving the decline? We\u2019d point to the Federal Reserve, which says that it intends to keep short-term interest rates high to ensure inflation gets tamed. That\u2019s also pushed long-dated bond yields higher, making stocks less attractive simply based on yield differentials. The conflict in Israel and Gaza certainly isn\u2019t helping investor sentiment. <\/p>\n

With the S&P 500 sitting at its 200-day moving average, it now looks vulnerable to more declines. A drop below the 200-day moving average typically signals that longer term investors are starting to lose money and might be primed to sell if declines continue. This one might be particularly important because the S&P 500 had spent 25 days trading between the 200-day and 50-day move averages, the second longest streak in the past 30 years, according to SentimenTrader. While that could indicate some short-term pain, it could also lead to longer term gains: The S&P 500 was higher three months later 78% of the time for a median gain of 3% since 1936 after trading between the two moving averages for at least 25 days.<\/p>\n

Still, breaking the 200-day moving average after spending a long period above it could mean trouble, according to SentimenTrader. Since 2010, such a break has resulted in four losses over the next three months and four gains, with an average return of just 0.5%. The worst-case scenario was in 2020, when the pandemic caused the S&P 500 to drop 17% in just two weeks. An early break in 2022 saw the S&P 500 drop 9.8% over the following six months.<\/p>\n

If the break is real, investors should keep a close eye on 4100, down 3.3% from a recent 4242, and then 3900, which would be an 8% decline. For those looking for a buying opportunity, ensure the index holds that 200-day moving average first. If it doesn\u2019t, another meaningful drop\u2014and a better buying opportunity\u2014could be in store. <\/p>\n

Write to Jacob Sonenshine at jacob.sonenshine@barrons.com<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

The S&P 500 sank below a key level Friday\u2014one that would indicate more declines are a possibility. The S&P 500 has fallen about 8% from its intraday high for the year of 4607 hit in late July to about 4238 by late Monday morning. Earlier in the day, it traded as low as about 4190. […]<\/p>\n","protected":false},"author":1,"featured_media":76150,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-76149","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-investing","tag-featured","post_format-post-format-video"],"yoast_head":"\nThe S&P 500 Is Trying to Hold Its 200-Day Moving Average. What Happens If It Breaks. | iFintechWorld<\/title>\n<meta name=\"description\" content=\"The S&P 500 sank below a key level Friday\u2014one that would indicate more declines are a possibility. 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