One Blog’s Reason We’ve Seen the Market’s Low

By on April 5, 2009

The blog Trader’s Narrative speculates that we may have seen the low in the S&P 500 based on its divergence from the its 200 day moving average. Since 1950, the index hadn’t traded 30% below it moving average until November 2008 and March 2009. This would indicate there was a degree of panic selling rarely seen.

One caveat: this indicator would have signaled a buy in November, but the market plunged quite a bit further in March and it looks like it could go down even more with a second massive wave of mortgage re-sets just starting.




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