Stocks Sees Biggest Drop Since May

The stock market is starting to feel some pain. As I write this, the S&P 500 has been down as much as 1.7% this morning. We haven’t seen a loss like that since May. Of course, there’s a lot of trading to do between now and the closing bell.

The warning sign came on Friday when the S&P 500 closed just below its 50-day moving average (that’s the blue line on the chart below). Until now, the 50-DMA has been like a trampoline. Every time the market has gotten near it, the bulls have rushed in to save the day. Well, they’re nowhere to be seen this morning.

The S&P 500 hasn’t closed below its 50-DMA on back-to-back days since last October. That’s the longest such streak in 25 years.

What’s the reason for the selloff? There’s a lot of talk about Evergrande going belly up. That’s a Chinese development firm that has way too much debt. The fear is that we’re near a “Lehman moment” where one crack in the wall highlights many, many cracks. Of course, there are lots of folks who claim we’re near a Lehman moment every week.

Posted by on September 20th, 2021 at 10:38 am


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