The S&P 500 index is closing in on a death cross, an ominous chart pattern that underscores the downtrend suffered in an asset. A death cross appears when the 50-day moving average crosses below the 200-day moving average, an event that many chart watchers view as marking the spot a shorter-term correction morphs into a longer-term downtrend.
At last check, the S&P 500 index SPX, -0.72% was trading down 0.6%, with its 50-day moving average at 4,508.56 and its 200-day at 4,466.34, a differential of 42.22 points, which it could possibly breach by next week at the current pace of decline.
The approach of a death cross for the broad-market benchmark comes as the Dow Jones Industrial Average DJIA, -0.56% saw a death cross materialize (the 50-day at 34,990.79 fell below the 200-day MA at 35,008.55) in Tuesday trade, with Monday’s nearly 800-point tumble likely hastening that bearish cross. The last time the S&P 500 registered a death cross was nearly two years ago on March 30, 2020, at the height of the pandemic-induced selling. The DJIA saw its death cross materialize at what is widely viewed as stock’s bear-market bottom on March 23, 2020. It is worth noting that such crosses aren’t necessarily good market-timing indicators, however, as they are well telegraphed, but they can help put a selloff in historical perspective, technicians say.
The decline in the broader market was taking hold, with safe-haven assets, including gold GC00, 0.51% and benchmark 10-year Treasury notes TMUBMUSD10Y, 1.863%, generally drawing bidding, as n intensifying clash in Eastern Europe, raises the prospects of a slowdown in the global economy and a jump in values of commodities.
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