WSJ reports,"for the third time in three weeks, the broad stock index slipped below this key technical level, a gauge that chart watchers use to track the market’s short-term trend. In all three instances, stocks rebounded intraday and finished above the 50-day moving average".
In the final trading hour on Thursday, bulls are hoping the pattern will repeat itself again.
"The S&P 500 was recently down 1% to 1869, after earlier falling as low as 1862. The index’s 50-day moving average sits at about 1865, according to FactSet.
The S&P 500′s drop on Thursday is part of a broad-based selloff that also sent the small-cap Russell 2000 into correction territory, down more than 10% from the record high it hit two months ago.
To be sure, banking on the S&P 500 immediately bouncing off the 50-day average hasn’t always been a successful strategy.
Just this year, the S&P 500 fell below this line in late January and early April. In the first instance, the S&P 500 fell another 4.7% after breaching the technical indicator, a drop which lasted for about two weeks before the index bottomed. In April it fell another 1% after breaching the chart line, although it bottomed the next day".
Latest Economic Indicators have been bearish for the Chinese economy,Growth data have been poor for
the Euro Zone, and economic data have been mixed for the U.S. Economy. I wouldn't follow technical
criterion for investment purpose, with the present world scenario.
