For the second time over the past three trading days, the stock market is seeing fairly steep midday sell-off. It’s obviously not a major decline, but 1% is still a meaningful move. However, also for the second time in three days, the S&P 500 is stabilizing at its 50 DMA (just like it did Friday afternoon).
I don’t mean to state the obvious, but if it breaks below that line, the algos will almost certainly hit the sell button.
In other words, today’s ISM data WAS very disappointing (and we cannot find anything that would suggest it was distorted by anything)…so the decline so far today IS justified. However, traders should know that it could get worse (whether it’s justified or not) due to technical reasons. So keep a close eye on that 50 DMA.
Matthew J. Maley
Chief Market Strategist
Miller Tabak + Co., LLC
Founder, The Maley Report
275 Grove St. Suite 2-400
Newton, MA 02466
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