Stock markets get pasted


The widely watched S&P 500 index not only failed to hold the 900 level yesterday, it also closed below its 50 and 200 moving averages, a highly bearish signal. The Dow and Nasdaq also got whacked.

Trader Mike reads the tea leaves. I once asked a friend who has traded futures successfully if technical analysis worked. He thought it did, then said besides, it can be a self-fulfilling prophecy. If everyone thinks it’s bearish when an index breaks its 200 ma, then they start selling, and that drives the index down even more.

The party on Wall Street appears to be over. It never did have much relationship to reality anyway.