With many professionals watching the 200 day moving average on the index (1,101) for directional clues, we are now within 20 points of breaking below it, which would be a bearish sign and most likely accelerate the downward trend.
Our domestic Trend Tracking Index (TTI), which moves slower than the S&P; 500, has now moved within 2.36% of breaking below its own long term trend line. Long before this happens we will have been stopped out of our remaining equity positions.
While it’s always possible that the 1,100 level may function as support and trampoline the markets higher again, I would not hold my breath. Fundamentally, the news out of Europe is anything but encouraging, with daily surprises on the menu, so be sure to watch your sell stops and execute them when necessary.
We’re currently in an environment where it’s better to be safe than sorry.