As we discussed yesterday, the DJIA has now joined the SPX in having tagged its 200-day moving average. After a nonsensical pop yesterday, the futures are right back down to it.I consider the SMA200 the most important moving average for longer-term trends, and it has delivered like clockwork over the years.Other indices are either at or near their SMA200s, including RUT and COMP. Our yield curve model, oil and gas charts, and currencies all indicate potential additional downside — perhaps only enough for COMP to reach support and SPX to make a slightly lower low.
A BAML strategist was on CNBC a few days ago, suggesting stocks were in the eye of the storm because ZN had broken out. Ummm…nope.The wheels could definitely still come off. A drop back through the SMA200 opens the door to our much lower targets. But, if the SMA200 isn’t breached, the bears should just keep their yaps shut.
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