Stocks closed under the 100 day moving average once again on Monday. This happened just two weeks ago with stocks quickly jumping back higher. That will likely be the outcome this time as well.
The most interesting thing about the current trading range is how tightly packed we find the moving average support lines. Only 55 points separates the 50 day from 200 day moving average. …that’s a meager 2.6% distance. For perspective that spread was more like 16% just two years ago.
What does it all mean?
It just means we’ve been stuck in this trading range for a long time which is why these lines are moving closer together. Again, we need some new catalyst to wake us from this slumber.
Will that come on Wednesday from the Fed?
It could be. However, I bet that there are more questions than answers after their announcement with more sideways trading as the result.
aka Steve Reitmeister
Executive Vice President, Zacks Investment Research