After falling as low as 1,011 on July 1, the S&P has staged a remarkable rally. Courtesy of rising prices, complacency has once again staged a comeback on Wall Street.
Despite this rally, we should not forget that nearly all major U.S. broad market indexes and sector indexes are trading below the 200-day simple moving average (SMA).
This bearish signal is compounded by the fact that the 50-day SMA has crossed below the 200-day SMA for a majority of indexes.
The 200-day SMA is the line in the sand that separates technically healthy stocks from the sick ones. For good reason, the break of the 50-day SMA below the 200-day SMA is generally considered a death cross.
Over the past 10 years, buy/sell signals given by the 200/50-day SMA crossover have had a 75 percent accuracy ratio, with winning trades outperforming losing trades by a 2.8:1 ratio.
Those are not odds you want to bet against.