Death Cross

The death cross on the S&P is just days away and only time will tell where this market will be headed. The death cross is when the 50 day MA crosses below the 200 day MA and is followed by many technicians and the overall market. This is a bearish signal to say the least, and many times historically the death cross has been followed by declining markets. This cross is not a 100% predictor of a bear market, but is a good indication. The opposite of this is the golden cross, whereby the 50 day MA crosses above the 200 day MA. Only time will tell where this market is headed but we have broken important support at around 1040 on the S&P and many are calling for this market to fall even further to 900. The internals of this market have been weak with disappointing fundamental news and in addition to this bearish technical indicator, things do not bode well for the equity markets this summer. Look for reactionary rallies during the decline and I would be looking to fade (short) any rallies into previous broken support levels. Just make sure you stay nimble and flexible in your trading so that you don't cause too much emotional damage to your mind and trading.

#1 rule - Capital preservation!! Lighten up on long positions, raise cash, or put in some hedges for the months to come!