U.S. Stock Rally Stalls at 50-Day Moving Average

MoneyBeat by Paul Vigna

Since Feb. 11, the market did break through several resistance points rather easily, mainly on the back of 1% gains in four of the past six sessions. It was a good run, but it isn’t on its own the signal of a bottom for the technical analysts. “Current price structure in U.S. and global equity indexes continue to warn of a deeper intermediate term decline,” said John Kosar, director of research at Asbury Research. Two things he’d like to see to indicate a wider turnaround: narrowing corporate bond spreads, and expanding ETF asset flows.

Resistance for the S&P is at the 50-day moving average, currently sitting at 1949 (for the record, the 200-day moving average lies at 2029). That has so far proven a stubborn mark. On Monday, the index rose to that level in the opening minutes of trade, and spent the rest of the afternoon trapped in a tight range underneath that. On Tuesday, situated just under that mark, equities dropped from then opening bell, and have been mired deep in the red all morning.

continued on the Wall Street Journal website (access requires subscription)

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