There are currently 32 companies in the S&P 500 that are trading within 1% of their 200-day moving average (MA200).
What makes this interesting is that people are still of the mindset that everything is fine and the market is going to keep rallying higher...
But a break below the MA200 is widely accepted as a late sell signal.
It makes sense, we've had a long period of time where the market was trending lower, and as of recently, stocks have received an unwarranted spike higher. Due to the further-looking nature of this indicator, the MA200 hasn't received the message yet.
So at this point, you would have seen a ton of other reasons to sell off, whether it's a cross below the 20-day moving average (MA20) or 50-day moving average (MA50), a break in the Bollinger Bands and overbought RSI, breaking the Fibonacci levels - the list goes on and on.
But a break below the MA200 in current market conditions is likely to have investors running with their tails between their legs.
As always, there's more to the story, and combing through 32 charts can be a tedious process. So the next logical step is narrowing the list down by adding in additional conditions in attempts to confirm this theory.
Using my filters, I input these 32 companies and added the requirement that they are trading within 1% of their MA50 AND the MA50 is showing a bearish bias.
That condition narrowed it down to these eight companies...
This is like a technical hitlist for the SPDR S&P 500 ETF Trust (SPY) right now.
But for you, "good enough" isn't good enough. So I put my nerd hat back on - you know the blue-and-yellow one with the pinwheel on top? It's something like that.
By the way, the hat wasn't the only thing that had me feeling like a kid again. To find the best opportunities in this concise of a watchlist, I got to use the new software the folks at Money Morning Live have so graciously been developing for me - and let me tell you, it's like a new toy on your birthday when I crack this thing open.
So, after importing this list of eight companies into the software, I found two tradable opportunities, which are as follows:
- Goldman Sachs Group, Inc (GS)
- Kinder Morgan Inc. (KMI)
Each of these tickers fit every last one of the criteria I threw at them: within 1% of the MA200 and MA50, the MA50 was trending lower, AND the Bollinger Bands are within their top 10% tightest readings of the last 12 months.
The bottom line here, both of these companies are set to see a volatility explosion in the next couple of days that are going to drive them lower and you don't want to miss the boat.
The post This is the Technical hit-list for the S&P 500 Right now... appeared first on Penny Hawk.
About the Author
Chris Johnson (“CJ”), a seasoned equity and options analyst with nearly 30 years of experience, is celebrated for his quantitative expertise in quantifying investors’ sentiment to navigate Wall Street with a deeply rooted technical and contrarian trading style.