The Last Three Times This Happened, Stocks Dropped 5%-10% Shortly Thereafter

 

The S& P 500&rsquo s weekly MACD indicator has triggered a &ldquo sell signal.&rdquo

For those of you who like technical analysis, this indicator is formed by two interweaving lines.

The first line (usually black on the chart) is formed by subtracting the 26-week exponential moving average (EMA) from the 12-week EMA.  

So if the 26-week EMA is 12 and 12- week EMA is 10, the black line would be at 2 for that particular day.

The second line (usually red on the chart) is formed by the 9- week exponential moving average.

The &ldquo signals&rdquo come when the two lines connect:

1.Anytime the black line breaks above the red line, it triggers a &ldquo buy&rdquo signal.

2.Anytime the black line breaks below the red line, it triggers a &ldquo sell&rdquo signal.

The market has triggered four such readings in the last two years. Two of them preceded sharp corrections of 9+% in the span of a week or so. A third resulted in a gradual 5% grind lower. The fourth just hit.



Where does this lead us?

A 4.7% decline would bring stocks to stub-2250 on the S& P 500. A more vicious and severe decline such as the ones that occurred in January &rsquo 15 and August &rsquo 16 would bring us to 2,125 on the S& P 500.



Hope you&rsquo re ready&hellip