S & P 500 INDEX DOWNGRADED WITH THE BREAK OF 2840
The page below is reprinted and updated from my latest Chart Outlook, in which I stated that the S&P would be downgraded medium term if the support at 2840 was broken.
This support was the more important as the S&P failed to rise above the long-term resistance level, which I had identified some months ago.
The next supports are 2730, 2690 and 2600.
Notice that the 40-week moving average in the S&P 500 Index is at 2760. This is where the Index is trading right now. A break of this 40-week moving average would be negative for my MacroTechnical US-Model, shown below. It is made up of three series,
the S&P 500 Index,
the Weekly Jobless Claims
the Economic Cycle Research Index
If two of threse three series are breaking below their 40-week moving average, the Model will trigger a SELL signal on the US Stock market and the US Economy.
The S&P is close to breaking the 40-week average.
The latest weekly reading in the Jobless Claims was another downtick. It is likely that the (inverse) WJCs has peaked and that it will fall below the 40-week average.
The ECRI recovered in the last few weeks and is barely above the 40-week average.
POSSIBLY, AS IS MOST OFTEN THE CASE, THE STOCK MARKET, as the Leading Sentiment Indicator, WILL BREAK DOWN BEFORE THE ECONOMY DOES. In my observation of the correlation of the stock market to the economy, it has always been such, that if you want to wait for the negative macro indicators, the stock market is already close to the bottom.
IF THE S&P BREAKS BELOW 2730 I WOULD NOT WAIT TOO LONG AND SELL (again).
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