Posts Tagged ‘death cross’
Is America Dead?
Tuesday, 23 August 2011
My father and I had a long conversation the other day about his fears for the future of his pension, home and standard of living.
He has spent almost 30 years working for the City of Philadelphia, climbing his way up. He’s finally nearing retirement. These years should be the best for him. He should be looking forward to the freedoms that come with the hard work he has put in, a time for him to enjoy his family and his hobbies and maybe even spoil himself with some of the money he has saved for this day.
But he can’t.
Fixed-Income Hardship
Like most of us, he has serious doubts about the future. He sees costs of all his necessities rising, and is forced to watch the value of his home continue to drop. It’s lost almost 40% of its value in the past two years and is still not stabilizing. The value of his conservative IRA has also dropped.
All this and he is NOT making any more money this year than last. Unfortunately, this is the case for most folks. The chart below shows the quarterly change in wages from 2009-today. This is not the sort of chart you want to see your income — or EKG — look like.
This kind of stagnant income can’t keep up with rising costs. The cost of everything — from food and fuel to insurance and clothing — is up and climbing in a big way. Compare the Consumer Price Index (CPI) chart below to the flat income chart and you can see why things don’t add up for most of us.
Home Sale Prices Are Still Hurting
Last month, Case-Shiller reported home sale prices are barely at Read more
Death Cross Signals Bear Market… And Buying Opportunity
Jared Levy, Editor, Option Strategies Weekly
Friday, 19 August 2011
Economies around the globe are grinding to a halt. The eurozone is coming apart at the seams and the American consumer is losing confidence and strength. But just when you thought things couldn’t get any worse, a serious warning signal showed up in the S&P 500 and may have helped spark this sell-off.
A big storm is coming, and it’s going to be rough…
I’ll show you how to navigate the storm, identify and clarify this indicator, and help you make the decision to buy or sell.
Analyze This Death Cross!
Traders generally fall into one of two analytical disciplines: fundamental or technical. Either they research the fundamental aspects of a company to make their buy and sell decisions, or they examine the price charts of stocks to find support, resistance, formations and trends.
But even the most die-hard fundamentalists will use some sort of a moving average or basic indicator to confirm their ideas.
Two of the more common indicators that longer-term investors use are the 200- and 50-day moving averages. Basically, a moving average is the average price of the stock over a period of time. So a 200-day moving average tracks the average price of the stock over the past 200 days. Investors use these indicators to gauge a trend’s strength.
But they can also tell investors when to buy or sell.
For example, when the 50-day moving average crosses above the 200-day and the stock price is above both of them, this is considered a buy signal. As long as the 50-day stays above the 200-day average, investors will generally hold a position.
Sometimes moving averages signal big changes in trends.
The “Death Cross” or “Iron Cross” as some call it occurs when the 50-day average crosses below the 200 and the stock is below both averages. When this happens the bull market has ended and it’s time to sell. Sometimes this selling gets violent.
On Wednesday, after the close, a Death Cross was formed in the S&P 500 (SPX). When we combine this formation with inflation pressures and unemployment claims, we have a perfect storm for a mini-crash.
That’s what happened yesterday.
You can see the Death Cross in the chart below as the orange line (50-day) crossed below the red line (200-day).
The markets finished down almost 5% yesterday and the selling may be Read more
Just When You Thought Things Were Looking Up…
By Jared A Levy
Watching yesterday’s market action, I realized that we are indeed in a bearish trend. I noted this a week or so ago in my article referencing technical indicators that were recently violated to the downside.
As the S&P 500 Index (SPX) continues back toward its July lows, which are just above the 1,000 mark (1,010.91, to be exact), many technical analysts – including me – are concerned about a continuation back to that level. There currently doesn’t seem to be much technical support from the current SPX price down to the July low.
Ever since the dreaded “death cross” that occurred in July, I have been monitoring the price action of the SPX (partially to check the validity of the cross). After the cross occurred, which you can see in the chart below, the index actually rallied.
The 200-day simple moving average (in yellow) crossed above the 50-day simple moving average (green) early on. The exponential 200-day (red), crossed the 50-day later in the month. Regardless of which trendline you prefer, the index will view these cross points as levels of potential resistance.
