Monday, August 8, 2011

S&P 500 Crash Update (Charts) *S&P Downgrade Massacre: U.S. Agencies Credit Ratings Cut*

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S&P downgraded the credit ratings of U.S. government agencies FDIC, NCUA, FHLB, FCB, FNMA, and FHLMC on Monday, August 8, 2011


S&P 500 The S&P 500 closed at 1119.46 on Monday, August 8, 2011 and at the lowest close since September 10, 2010 (1109.55). The S&P 500, SPX, crashed and was down -6.66% for the day, is down -16.77% for the past 11 trading days, is down -13.37% for August, was down -2.15% for July, and is down -10.99% for 2011. Down, down, down... SPX is up +65.47% since the March 9, 2009 market bottom which was 882 days ago. The SPX closing at 1363.61 on Friday, April 29, 2011 was a multi-year closing high, the highest close since the closing of 1404.05 on June 5, 2008. SPX is now -17.90% below that multi-year closing high. That peak closing of 1363.61 exceeded the June 6, 2008 closing of 1360.68. The current close is now far below the closings of 1300.68 on August 28, 2008 and 1305.31 on August 11, 2008, which was a rally peak, just before the USA financial crisis and market crash.

Notable S&P 500 Weekly Crashes The -92.90 and -7.19% crash this past week, before today's (Monday, August 8, 2011) crash, for the week ended August 5, 2011, was one for the record books. That was the largest drop in price since the week ended November 10, 2008, which was -200.01. This was the largest drop in percentage since the week ended November 21, 2008, which was -8.39%. By comparison, the previous weekly crash was the Flash Crash during the week ended May 7, 2010 and the declines were -75.81 and -6.39% for that week ended.

Correction Territory Some define a correction market and correction territory as -10% or more from the market peak, therefore, the SPX would be considered well into a correction. The SPX is now -17.90% below the peak, the multi-year closing high of 1363.61 on Friday, April 29, 2011.

Volatility VIX closed on Monday, August 8, 2011 at an astronomical 48.00, up an alarm-bell ringing +173.97% for the past 11 trading days and at the highest close since the week ended March 6, 2009, (49.33), the week before the cyclical market bottom. VIX is up +202.46% in the past 5 weeks, since the week ending July 1, 2011. The skyrocketing VIX has risen far above the 20, 50, 100, and 200-day moving averages.

U.S. Dollar The U.S. Dollar Index at 74.94, was flat on Monday, August 8, 2011 at +0.19%. The USDX is now above the 20-day average, but continues below the 50, 100, and 200-day moving averages. The USDX continues in the middle of a trading range that began in March 2011.

S&P 500 Macro View The daily, weekly, and monthly charts below show the incredible crashes of the past two trading days and the disastrous technical damage. The S&P 500 has dropped all the way back to September 2010, December 2009, October 2008 financial crisis, 2004 consolidation trading, and 1998 prices! The SPX at 1119 has found tenuous support at just below the peak of a small rally a year ago, August 2-9, 2010. However, it appears the real support was the market finally closed for the day. There is plenty of additional, significant support below but that does not appear to be the issue. Investor confidence is the issue and there is none currently. SPX has dropped very far below the 20, 50, 100, and 200-day averages. The S&P 500 is at the lowest close since Friday, September 10, 2010 (1109), which interestingly was the last day SPX was below the 200-day average before gapping up on Monday, September 13, 2010 and rallying. SPX then closed above the 200-day average every trading day until this last Tuesday, August 2, 2011, when it closed below. In addition, SPX is also back to about the YE December 31, 2009 close of 1115.

Economic and Market News Information about the USA and Global economies plus the USA financial system are posted at Boom Doom EconomyFinancial ControlsBaidu Planet, and Neo Solomon.

S&P 500 DAILY CHART (click on chart to enlarge)

S&P 500 Daily Chart Below is the SPX daily chart since December 4, 2009 to illustrate recent price interactions with current trading.

Noteworthy Closing Prices
Current Close: 1119.46
2011 High: April 29 1363.61
2011 Low: August 8 1119.46
2010 High: December 29 1259.78
2010 Low: July 2 1022.58
YE December 31, 2010: 1257.64
YE December 31, 2009: 1115.10
Market Cyclical Low: March 9, 2009: 676.53

S&P 500 Daily Chart Review
Intermediate Term Trend: plunging 25d avg greater than strongly descending 50d avg since 7-22-11; SPX is very far below both 25d and 50d avgs, bearish
Long Term Trend: SPX less than 10 month ema = 1249.70 beginning week ended 7-29-11, bearish
Key Resistance: see discussion above
Key Support: see discussion above
Moving Averages: far below all major averages: 20d, 50d, 100d, 200d avgs
Uptrend Line: below since 7-28-11; line from 3-9-09 cyclical closing low of 676.53 up thru the 7-2-10 closing low of 1022.58
Downtrend Line: below since of 7-8-11, had been below since 4-29-11, line from 10-9-07 all-time closing high of 1565.15 down thru the 4-29-11 multi-year closing high of 1363.61
RSI 14 day = 9.86 is extremely oversold, descending, lowest since 7-6-10 (10.40)
RSI 28 day = 28.39 is oversold, descending, multi-year low
MACD (12,26,9) = -19.64, descending, lowest since 10-13-09 (-23.97); multi-year high 7-7-11 (+9.45)

S&P 500 WEEKLY CHART (click on chart to enlarge)

S&P 500 Weekly Chart Below is the SPX daily chart since February 2002 to illustrate price interactions with current trading.

S&P 500 MONTHLY CHART (click on chart to enlarge)

S&P 500 Monthly Chart Below is the SPX daily chart since March 1998 to illustrate price interactions with current trading.


Conclusion The S&P 500 crashed on Thursday, August 4, 2011 and then again on Monday, August 8, 2011 for a variety of USA and Global uncertainties. In reviewing prior daily crashes, the crash close is normally not the bottom, but is the significant portion of the overall drop. SPX then continues downward some before the bottom is in. Oversold bounces occur plus a consolidation begins developing for a few weeks. A rally generally ensues. Therefore, SPX at 1119 and questionable support is probably not the bottom of the downtrend. The intermediate-term trend indicator is now bearish. The long-term trend is now bearish. Our ultra long-term indicator that only occasionally comes into play is bearish. We continue bearish for August, continue neutral to slightly bearish intermediate-term (6 months), and continue bullish long-term (12 months).

Disclosure & Portfolio We have no position in SPX, SPY, or any other related ETF as of this posting. We will so note such positions at the time of a weekly posting, but not any short-term trades, such as intraday or intraweek trades, between the weekly postings. We continue to have no long equity positions, period.


The S&P 500 has been widely regarded as the best single gauge of the large cap U.S. equities market since the index was first published in 1957. The index includes 500 leading companies in leading industries of the U.S. economy, capturing 75% coverage of U.S. equities, it is also an ideal proxy for the total market. S&P 500 is maintained by the S&P Index Committee, a team of Standard & Poor’s economists and index analysts, who meet on a regular basis. The goal of the Index Committee is to ensure that the S&P 500 remains a leading indicator of U.S. equities, reflecting the risk and return characteristics of the broader large cap universe on an on-going basis. The Index Committee also monitors constituent liquidity to ensure efficient portfolio trading while keeping index turnover to a minimum.


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