The market has come well off it’s lows, and it’s been a hell of a ride for Bulls since last October.
But the market seems to fundamentally be breaking down here in favor of bears. Here are 5 technical reasons why:
The first signs came July 27th, when we had a major bearish engulfing - a very high predictor of lower prices.
Then we fell below the 50-day moving average which usually acts as support.
We rallied since last Friday, but today we failed at the 50-day moving average.
Price also created another bearish engulfing. A sign of more to come, especially as it happens at the 50-day MA (that’s called confluence; when the “stars align” for a trade)
All happening on lower / declining money flows.
Here is a chart as of today of the S&P 500:
These are all very strong indicators that the market is breaking down in favor of bears.
Not to mention, in this entire bull run, the Dow hasn’t really participated. For a market run to be durable, all equities must participate.
Bears look like they’re back in control, as this is a fundamental breakdown of the technicals… buckle up — the bottom is about to drop.