(Bloomberg) -- Investors ought to heed a warning signal that the Standard & Poor’s 500 Index is on the verge of sending for the first time since the 1940s, according to Albert Edwards, a global strategist at Societe Generale SA.
As the chart illustrates, the S&P 500’s average for the past 50 months is close to falling below the 200-month average. The moving averages closed yesterday at 1,151.90 and 1,145.30, respectively.
This kind of a move last occurred in March 1946. After gains in April and May that year, the index had six straight months of losses. The decline totaled 23 percent, which exceeded the 20 percent threshold commonly used to define a bear market.
“Investors beware,” Edwards wrote in a report yesterday. The London-based strategist referred to the potential shift as “the ultimate death cross,” a chart pattern that foreshadows more losses. He expects the index to reach 400 before the next bull market begins.
Japan’s Nikkei 225 Stock Average had a “death cross” in 1998, as Edwards wrote in the report. Yesterday’s close for that benchmark was 47 percent lower than its level before the moving
averages intersected.
The Stoxx Europe 600 Index, on the other hand, managed to advance after the 50-month and 200-month averages crossed last October. The index had a 5.4 percent gain through yesterday.
No comments:
Post a Comment