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On Monday investors were trying to figure out if the stock market was about to bounce or if it was in the early stages of a bigger move lower.Both the Dow and the S&P 500 extended losses to a fourth day with investors taking their cues from last week's disappointing jobs report. That, in turn, called fundamentals into question by raising new concerns about the strength of the recovery.
The technicals were also somewhat concerning.
The Dow Jones industrial average closed below its 50-day moving average for the first time since December 19th.
Should you prepare for a bigger sell-off?
If you're looking for a 'tell', trader Steve Grasso says watch the S&P and how it behaves if it tests 1370. “I think we hold 1370 – but if we break lower – it’s 50-handles down,” he says.(1370 was the high end of a range that served as strong resistance in 2011. The conventional wisdom in technical analysis is that what was once resistance becomes support.)Trader Brian Kelly is cautiously optimistic. "Basically I think down 1.5% is it. We need another negative catalyst to get us lower," he says. "I think we're stabilizing."
However, he does say that market weakness at the end of the session was concerning. “And high yield has really been underperforming. That's been happening for almost a week. That too is a warning sign." He suggests watching HYG as a 'tell.'
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HYG News & Analysis
DATA IS REAL-TIME EXCEPT NOTED WITH *
* DATA DELAYED AT LEAST 15 MINUTES