TRADING JM

[TREND1]

S&P 500 NEARS TEST OF SEPTEMBER HIGH ... Chart 3 shows the S&P 500 trading below its 200-day average for the second day in a row. It's also bearing down on its September peak near 2020. That will be an important test. Its 50-day line is just below that. A close below those two lines would signal a much deeper correction. Such a breakdown would also call into question the sustainability of the fourth quarter rally. Some other indexes look even worse. Chart 4 shows the S&P 600 Small Cap Index in danger of slipping back below its 50-day moving average. Lack of upside participation by smaller stocks has been a source of concern over the last month. More weakness by smaller stocks would worsen the market's technical condition.

chart 3



chart 4