The S&P 500 is down 16% in a month and trading exactly where it was last year before Bernanke's Jackson Hole speech on QE2. The S&P crashed through the 50 month moving average (blue line) and bounced off the 200 month moving average (red). I think the 200MMA is a critical long-term support level to hold on the S&P. The S&P pierced the 200MMA in late 2008 during the financial crisis and now it's retesting that level. Other than late 2008 and early 2009, the S&P hasn't been below the 200 month moving average since the 1970s (see chart 3 below). I need more data to know exactly.
The S&P broke above the 50 month moving average during QE2, but failed a month after QE2 ended. So now the 50MMA is resistance along with the new downtrend line using the 2007 and 2011 peaks (chart 2). If you're a technical bull, are you thinking QE3 destroys these resistance levels? It would be interesting if the 50MMA crossed the 200MMA. The ultimate death cross.
The 50 day moving average is about to cross the 200 day moving average just like it did last year after the flash crash. Remember the head and shoulders pattern and 50/200DMA death cross were actually bullish for the S&P last year? Bernanke's next Jackson Hole speech is on August 26, so we'll see if the same thing happens this year. I'm waiting to see where the S&P settles down here. Btw, the S&P closed right at Peter Lee's target of 1,120 on the S&P.
S&P 500 Daily 2010-2011 (Courtesy FreeStockCharts.com)
S&P 500 Monthly (FreeStockCharts.com)
SPX hasn't been below the 200MMA since the 70s?