Misdemeanor Or Felony?
We often discuss how it is not very troublesome if an important moving average is pierced to the downside. Many stops will be put in that area. A chartist also prefers a “smooth” move toward that line, in light volume. The jury is still out below on how severe the crime should be with another move below the 50 day SMA this week on the XRT. The ongoing deliberations are leaning a bit more on the harsh side, with such another slice of the 50 day this week again after the same thing happening several weeks prior. The ETF is now nearly 4% below the line, and bulls would like to see it remain in close proximity instead. The September example did just that. This week the fund lost more than 8%, its largest drop in 7 months, and now sits in correction mode 10% off most recent 52 week highs. And a bit more disappointing was the set up coming into this week, with the prior 3 weeks all CLOSING very taut within just .40 of each other, at all time highs. That type of action often leads to explosive moves, and obviously it was to the downside this week. More concerning is this may be a triple top in the low 50s from 2015 and 2018 too. Time will shortly tell.