Weak housing and worries about Europe proved to be too much for the market yesterday and, after a modest opening rebound to higher levels, the major indexes slid for the remainder of the session as the chart above (courtesy of MarketWatch.com) shows.
The S&P; 500 ended up below the 1,100 level and broke below its key technical indicator, the 200-day moving average. This could increase downward pressure if prices stay below that point, and it will eventually act as overhead resistance.
The market’s weakness arrived just in time for the 2-day Federal Reserve meeting on interest rates. We will find out the results on Wednesday, but expectations are that no changes are imminent with key interest to remain at current low levels.
Our domestic Trend Tracking Index (TTI) moved closer to its long-term trend line, but still hovers +1.80% above it, which means that there are no changes to our current positions.
Against popular opinion, I still believe that low interest rates are here to stay with us for quite a while longer as the expiration of stimulus programs will not bode well for the economy. That’s why reduced equity holdings and increased exposure to bonds (via bond ETFs) may make sense until such time that a change in trends proves otherwise.