Economic Old Age, Part 5: 40% Unemployment Ain’t Awesome

The chart below reflects the boys and girls and robo-traders of Wall Street enjoying their last game of chart-point Ping-Pong. As is evident, the squeeze is on, and we don’t think this particular triangle “resolves” with another breakout into the financial stratosphere.

When the market peaked at 2873 on the S&P 500 back on January 26, there were 170 points a daylight between the 50-DMA and the 200-DMA.

Since then, the range has drastically narrowed. As the market has progressively lost its mojo, the 50-DMA (blue line) has steadily declined—even as the statistical momentum of the blow-off top in January has carried the 200-DMA  slightly higher.

So now the spread is just 67 points—meaning that the children are running out of playground. And that means, in turn, that a hissy fit can’t be far behind.
^SPX Chart

The reason is simple: Both props which have levitated the stock market into the nosebleed section of valuation history are now coming undone.



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