Market Notes
CHART OF THE WEEK: THE STOCK MARKET'S ALL-IMPORTANT BOX
After plummeting 17% in just two weeks, the stock market has formed an extremely important "box." This is the idea behind our chart of the week.
The benchmark S&P 500 stock index spent much of the summer bobbing around the 1,300 level. It reached 1,353 in July. Then the summer crash arrived… and took the index as low as 1,119 (on a closing basis). It has spent the past month flopping up and down in a range between 1,119 and 1,218. Some traders refer to a trading range like this as a "box."
We see the bottom of this box – the 1,119 level – as a "line in the sand" for stocks. If this line is crossed to the downside, it's a major sign the European debt crisis is infecting the rest of the world. It's a major sign the U.S. economy is getting worse.
It's going to be an interesting October…
After plummeting 17% in just two weeks, the stock market has formed an extremely important "box." This is the idea behind our chart of the week.
The benchmark S&P 500 stock index spent much of the summer bobbing around the 1,300 level. It reached 1,353 in July. Then the summer crash arrived… and took the index as low as 1,119 (on a closing basis). It has spent the past month flopping up and down in a range between 1,119 and 1,218. Some traders refer to a trading range like this as a "box."
We see the bottom of this box – the 1,119 level – as a "line in the sand" for stocks. If this line is crossed to the downside, it's a major sign the European debt crisis is infecting the rest of the world. It's a major sign the U.S. economy is getting worse.
It's going to be an interesting October…
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